1.3m people leave broadband contract for cheaper deal

More than 1.3 million people have switched to a cheaper broadband deal after internet providers were forced to remind them their contracts were ending, Ofcom has said.

The regulator introduced new rules in February 2020 that require phone, broadband and pay-tv providers to warn customers when their current contract is ending, and how much they could save by signing up to a new deal.

The move was designed to help tackle the so-called “loyalty penalty” that sees customers who stick with a service paying more than new customers joining it.

Ofcom said that since the rules were implemented around two-thirds (62 per cent) of broadband customers near the end of their contract either signed up to a new deal with their existing provider, or switched to a new one when their deal ended. This is up from 47 per cent of customers in 2019.

In total, the number of broadband customers deemed to be out of contract fell from 8.7 million in 2019 to 7.4 million, giving Ofcom the figure of 1.3 million customers assumed to be paying less. It calculates that on average, out-of-contract broadband customers pay £5.10 more each month than they need to.

Ofcom said that the reminders, sent by text, letter and email, are working because two-thirds of customers who were sent one recalled receiving it. Of those, 90 per cent found it helpful, while a fifth reported that it prompted them into action they wouldn’t have taken otherwise.

However, some providers have a much greater proportion of out-of-contract customers than others. Virgin Media had the biggest proportion (52 per cent), way ahead of Sky (32 per cent), Talktalk (29 per cent), BT (28 per cent) and EE (21 per cent).

In many areas Virgin offers by far the fastest speed, making it less tempting for customers to switch.