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Helping consumers to get better deals in communications markets: mobile handsets.

7 Tachwedd 2018

Helping consumers to get better deals in communications markets: mobile handsets. [ 220 kb]

Citizens Advice welcomes the opportunity to comment on the proposals set out in Ofcom’s consultation. The mobile handset loyalty penalty is unacceptable: no consumer should continue to be charged for a product they have already paid off.

Ofcom must ensure that providers selling bundled contracts are clear about the respective costs of the airtime and handset elements and automatically apply a handset discount to their customers’ bills at the end of their minimum term.

  • Consumers face an average handset loyalty penalty of £22 per month, rising to £38 per month for smartphones. We estimate that 4 million people overpaid a total of £490 million on their last mobile contract and over 65s are twice as likely to have a loyalty penalty for over 12 months.

  • This practice needs to stop, and soon. It unfairly penalises loyal consumers and damages the reputation of the sector. Ofcom must ensure its interventions are implemented urgently, as it is clear voluntary action is not forthcoming.

  • Our key principles are that handset prices should be transparent and that no consumers should end up paying for a phone that they already own beyond their minimum contract period.

  • We welcome Ofcom’s decision to take further action in addition to its work on end of contract notifications.

  • We see 2 solutions to the loyalty penalty in the mobile market:

    • Taken together, Ofcom’s consultation proposals on transparency and automatic handset discounting would effectively end the loyalty penalty for bundled contracts.

    • Split contracts are an existing solution in industry already, and should sit alongside Ofcom’s proposals as an option for providers.

  • Ofcom should take further action to ensure out-of-contract consumers on bundled contracts no longer pay the loyalty penalty.

  • We welcome Ofcom’s future work on the broadband loyalty penalty outlined in this consultation. Broadband prices rise by an average of 43% at the end of the contract, costing an average £113 per year. This rip-off must be addressed.