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Price rises in fixed term contracts with communications providers; a change to the rules

3 January 2013

Ofcom intends to amend the rules applicable to communications providers’ (for mobile, landline and broadband services) fixed term contracts with consumers.

Following a detailed review, Ofcom’s preferred proposal is to amend the existing rules (which many consider biased against the consumer), so that consumers are able to withdraw from a contract without penalty (e.g an ‘early termination charge’-currently common) following any increase in price for services (including changes to the level of service provided which effectively constitutes a price increase).  Ofcom is however considering various other proposals. 

From today until 14 March 2013 interested parties can submit responses to these proposals. Ofcom’s proposal could have a significant impact on communications providers and in particular the UK’s major mobile phone companies, who have raised prices in recent months. This could lead to a loss in revenue and/or customers during what is a challenging and competitive time for the industry.

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