Ofcom plan to protect consumers from mid contract price rises

OfCom, the UK’s independent regulator for the communications industry, announced on Thursday that they had launched a consultation that aims to protect consumers from sudden price increases on the services they receive from telecom companies.

The announcement was made because of a backlash from a customer who encountered a sudden increase in their bill this year. Ofcom believes that it may become the reason why customers would come out of their contract if prices are raised. The service provider must be subjected to complete transparency if they want to increase the price of their service.

At present, those customers who are subjected to a price increase whilst under contract have two choices – to either take the hit or pay a penalty in order to exit their contract. Ofcom’s proposals will give them the option of an escape route if the measures are approved.

According to OfCom, there are other possibilities that are needed to be considered, transparency may be the answer to the problem since it might prevent telecom companies from increasing their service price. Another choice that is available is an “opt-in” choice to variable price contracts. In addition, OfCom will discuss the possibility of boycotting variable price contracts, this is despite the fact that a misalignment with the European legal framework could remove this option.

According to Claudio Pollack, Ofcom’s Consumer Group Director, a lot of consumers had complained to them because they did not know about the possibility of price increases as they believed that the contract is fixed. Ms Pollack added that the company is still checking out the proposed rules so that their proposal would give consumers a reasonable deal in relation to mid-contract price rises.

In the course of its review period, Ofcom have studied 1,644 customer complaints about regulations from September 2011 to May 2012. The regulator has said that they plan on finishing their consultation on 14th March this year, and hope to publish the results in June.