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Make billings for telecoms companies fairer and easier to understand

We will make billings for telecoms companies fairer and easier to understand, including making clear when a mobile customer has paid off the price of their handset.

Our Verdict

Citizens Advice has identified two major problems with the “bundling” model (a contract which includes the cost of a phone handset), which is how most people in the UK purchase mobile phones:

  • The lack of price transparency – in 73% of cases buying the handset and the data separately would be cheaper, but 55% of people think their bundled contract is the cheaper option.
  • The mobile handset loyalty penalty – at the end of the minimum contract period, once the handset has been paid off, 1 in 3 customers continue to pay the same original price despite no longer benefitting from a new handset.

This policy promises to make billing fairer and easier to understand.

From 31 July to 9 October 2018, Ofcom undertook a consultation on end-of-contract and out-of-contract notifications. Ofcom is proposing plans to make providers notify consumers before the end of their minimum contract period.

A further consultation took place between 26 September and 7 November 2018 on clear and fair handset charges for mobile users. The two main options under consideration in that consultation were:

  • mandating further transparency measures
  • fairer default tariffs

So customers would either receive clearer information about costs, including handset costs, or companies could be required to automatically move customers to a different, fairer deal when their minimum contract period ends. Or even a combination of both options.

At the time of writing there has been no response to the feedback from either consultation, but as consultations are often a prelude to regulatory or legislative changes, it is reasonable to see this as ‘in progress’.  If those changes do follow, we’ll be able to move it to ‘done’. Follow this policy to keep up to date with developments.

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There's always room for debate

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