BT, Talk Talk and Virgin Media will slash early termination rates for consumers ending fixed-line phone and broadband contracts, after intervention by regulator Ofcom.
The reductions could cut up to 85% off the cost of prematurely canceling a contract, after Ofcom put pressure on the telcos to cut costs as part of the Unfair Terms in Consumer Contract Regulations 1999 law.
It argues the legislation means consumers who end a contract early are only obliged to pay the outstanding balance covering the unused term, adding that the price could be even lower because operator’s costs fall when they no-longer have to maintain that subscriber.
The trio of telcos reluctantly agreed to the cuts after 18 months of discussions with the regulator.
BT will reduce its fee on three voice packages from an average of £7.67 (€9.17) to £3.17 from October 1, and Virgin will cut the average charge on its cable voice and broadband packages by £5.75 the same day.
Talk Talk introduced an average cut of £15.35 across four voice and broadband tariffs on June 1.
A spokesman for the firm said it was disappointed the regulator didn’t go further by requiring BT to include its broadband packages in the reduction, and that the reductions would confuse customers.
“In our view, the real issues from the customer perspective, and the ones that Ofcom appear unable, or unwilling, to address, are BT’s unchanged broadband charges, and BT’s unfair practice of rolling contracts where customers are automatically signed up to a new contract.”
Ofcom will press ahead despite the criticism, warning that other telcos must follow-suit of “face formal enforcement action.”
In April, the regulator opened a consultation into wholesale mobile termination rates proposing to cut the cost from 4.3p per minute today, to 0.5p per minute by 2015.