Watchdog’s call for cuts in phone fee shunned by Three

THREE has refused to cut fees for outof-contract mobile phone customers despite Ofcom warning that the industry is overcharging by close to £200m a year.

The mobile operator said by urging firms to slash rates the regulator risked “creating a stagnant market whereby consumers are not encouraged to shop around for the best deal at the end of their minimum term. We have worked closely with Ofcom to encourage consumer engagement, particularly around auto-switch reforms, end of contract notifications and best tariff advice,” a spokesman said.

Ofcom has been reviewing the industry for a year, focusing on contracts which bundle costs of a handset and data usage each month. Around 1.4m people are on them and Ofcom said they had been charged more than they should have, once the initial period ended and they had paid off the handset, as Sim-only deals were cheaper.

On average, they paid just under £11 each a month more than if they had Sim-only – more than £182m in a year. Ofcom said some operators, including Virgin Mobile, Tesco Mobile, O2 and Vodafone had agreed to cut prices or move customers to Sim-only deals.

But Ofcom said Three customers will “continue to overpay and will not receive similar protections if they stay on their current deal. Our research reveals a complex mobile market, where not everyone is getting a fair deal,” it said.

The watchdog wants fairer deals including a ban on bundling split contracts when the handset term is more than 24 months. It already requires firms to let customers cancel by text.

Which?’s Natalie Hitchins said such measures “still fall short and will leave many people exposed to rip-off charges”. Citizens Advice said reduced fees should be compulsory: “If Ofcom is unable to do this, then Government needs to intervene.”

£182m Total annual overcharging of UK mobile phone customers who do not switch to Sim-only deals after their contract ends