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Competition in the provision of communications services is good for consumers. Greater innovation is one such benefit, lower prices are another.

While the amount that consumers pay for communications services is falling year-on-year, the full picture is not always so apparent. Charges levied on top of the headline price - for example for non-direct debit payments or late payments or for early termination of contracts - may be unclear to consumers. If so, these additional charges may not be subject to the competitive pressures which discipline headline prices.

Following complaints from consumers, Ofcom has investigated these issues in detail. We have concluded that communications providers need to do more to ensure that consumers are properly informed up front about any charges which may be incurred. Communication providers will also need to change some terms and conditions to ensure these charges are set fairly.

In this consultation we are seeking views on a new set of guidance under the existing Unfair Terms in Consumer Contract Regulations . Ofcom’s draft guidance in relation to contracts for communication services is intended to help protect consumers from unfair terms in their contracts and will enable suppliers to comply more easily with the regulations . The key elements of the guidance are summarised in the Executive Summary.

At the same time, there is a concern that some additional charges may fall disproportionately on low-income consumers, increasing their costs or even excluding these consumers from some communication services altogether.

We believe some concerns over access and inclusion for low income consumers are best addressed by targeted social telephony schemes, such as BT Basic, which provides low cost rental (and an inclusive call allowance), with no additional charge for non-direct debit payments, for those in receipt of certain state benefits.

We recognise that there are broader concerns about the amounts low income groups pay for a range of services which go beyond communications services, and we are keen to engage with Government and others in an examination of these issues.

 

Ed Richards
Chief Executive

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