Research: Dual play customers’ ‘loyalty’ risk
January 11, 2019
Customers who sign up for combined broadband and TV packages are being hit with loyalty penalties of up to £690 (€766) a year, according to research from UK consumer body Which?.
The consumer champion found that two in five of customers (40 per cent) who signed up to so-called dual or triple play (if a phone line is included) bundles have stayed with the same provider for more than 10 years – and they may be overpaying by huge sums as a result.
When Which? spoke to Sky customers who had not attempted to haggle, it found that they were paying £1,050 a year on average. But when Which? analysed new deals currently on the market they found that the cheapest combined package was the Sky ‘Broadband + Entertainment’ bundle available from £30 a month, or £360 a year – an eye-watering difference of £690 a year.
Even customers choosing a premium package including faster broadband, extra channels including Sky Sports would only be paying £780 per year – a full £270 less than Sky customers told Which? they were paying on average.
When Which? asked Virgin Media customers how much they were paying for their broadband and TV bundle they found the average to be £960 a year for customers who had not haggled. But that is £576 more a year than the provider’s basic Player bundle – available for £32 a month, or £384 a year.
A Virgin Media VIP Bundle, which includes access to both Sky Sports and Sky Cinema costs an introductory price of £948 – still less than the average price current customers were paying for all levels of package.
BT customers told the consumer champion that they were paying £720 a year on average for their broadband and TV bundle. But a Classic bundle introductory offer with the firm would cost a new customer just under £480 a year -that’s £240 a year cheaper.
A Max HD BT package including premium add-ons such as sports and extra channels would set a customer back just under £600, still £120 less than what customers on BT told Which? they were paying.
The Which? survey also revealed how long people had been loyal to the same provider. Two in five customers told Which? That they had been with their provider for at least 10 years. This was the case for six in 10 (59 per cent) Virgin Media customers, three in 10 (30 per cent) Sky customers and a quarter of BT customers (25 per cent). Overall, three-quarters (77 per cent) of customers admitted to staying with their provider for at least three years.
This was true for nearly nine in 10 (86 per cent) Virgin Media customers, two thirds (65 per cent) for BT customers and three quarters (73 per cent) for Sky.
Providers will often advertise cheap introductory deals to entice new customers – and many consumers stay put after the initial contract comes to an end and substantial price hikes kick in. Worse still, prices can creep up each year thereafter, meaning customers become increasingly likely to be overpaying by a large amount if they stay loyal to the same provider for the long term.
The Which? survey found that haggling in this market produced good discounts – BT customers saved £210 (29 per cent) a year on average, while Sky customers saved £120 a year (21 per cent) and Virgin Media customers £180 (19 per cent) a year. Overall, 90 per cent of those who haggled received a fixed discount and now pay 22 per cent less on average for their bundle than they would have if they had not asked for a better deal.
Customers may find themselves staying with a TV and broadband provider for a long time as their offerings differ substantially. While Sky boasts 300 channels, BT’s bundle includes its sports channels and Virgin claims to offer the fastest average download speeds of up to 362Mbps.
Which? has repeatedly raised the issue of loyal customers overpaying for important services like broadband, mobile phones, insurance, mortgages and other financial products.
The Competition and Markets Authority recently made a series of recommendations to address these substantial loyalty penalties after finding that consumers are being overcharged by around £4 billion annually, with the less well-off and the elderly most likely to be longstanding customers and therefore are at risk of paying the loyalty penalty.
Which? wants to see concrete action from Government and regulators to bring these practices to an end. While it awaits the necessary action, Which? would urge consumers who are unhappy with their current deal to take power back into their own hands by switching to a better deal.
“Yet again we’ve found that loyalty doesn’t pay when it comes to your broadband and TV service,” advised Alex Neill, Which? Managing Director of Home Products and Services. “People will choose their provider often because of a cheap introductory deal and then stay for the content offering. However, you shouldn’t accept getting a bad deal, there are potential savings to be made for those who take the time to haggle and even bigger savings for those who switch.”