Compare Fibre research has uncovered that failing to switch providers at the end of a contract period can unnecessarily cost broadband customers millions of pounds collectively.
Choosing the right broadband package is a choice with many facets: speed, customer service and price the main factors. However, an often-overlooked factor is the price post-contract. The difference between contract and post-contract prices is always higher and often by a considerable margin.
Taking Virgin Media as an example, their M100 deal is £34 per month for 18 months. The price rises to £51 per month in month 19 onwards – an increase of £17 per month. Across their customer base, Virgin Media have 5.42 million customers in the UK. The net effect is an extra £92.1 Million per month to Virgin Media for providing the same service.
In a recent survey by Compare Fibre, 21 per cent of survey respondents said they either couldn’t be “bothered with the hassle of switching” or “worried about losing internet” connectivity when switching to a new provider.
Nathan Hill-Haimes, Co-Founder of Compare Fibre, said: “This is an effortless way for big providers to pray on a less active segment of their customer base. There has never been a more prime example of money for nothing and all customers should be aware of it. It’s perfectly within the providers right to do but is ethically very troubling.”
With Compare Fibre’s findings, it is reasonable to speculate that Virgin Media alone is earning an extra £220 million from these increases. The incumbent providers are earning at least £1 billion from post-contract price rises. This leaves the question – if Ofcom isn’t stepping up to fix this issue, will the wider market deliver a solution to this inefficiency?