BROADBAND exit fees and above-inflation price rises should be scrapped as UK customers face a cost-of-living crisis.
So says Alex Fitzgerald, CEO and founder of broadband disruptor Cuckoo. Six of the eight major UK broadband providers — BT, EE, TalkTalk, Vodafone, Plusnet, and John Lewis Broadband — are raising prices by 8.2 to 9.3 percent, depending on contract dates. That will cost UK households more than £100m a month, an estimated annual total of £1.3bn.
Fitzgerald says internet users — usually stuck in 18-month or 24-month contracts — are often unable to react because of exit penalties. Unlike the energy sector, where wholesale prices have increased, wholesale costs in broadband are regulated by Ofcom, and have remained flat for two decades.
“Millions of people in the UK are facing the worst cost-of-living crisis for decades,” says Fitzgerald. “Broadband providers must do the decent thing: scrap the exit fees and axe above-inflation increases.
“Most broadband customers are tied into long contracts. Many won’t have read the small print properly, and won’t realise they face an annual increase tied to the Consumer Prices Index with another four percent whacked on top.
“When they do realise, and try to leave for a better deal, they run into the brick wall of exit fees. These can be hundreds of pounds. Broadband firms use opaque methods to calculate the fees, meaning customers aren’t sure of how much they could have to fork out.”
The price rises, combined with exit fees, create “a trap that is so unfair”, Fitzgerald says. “It’s going to hurt the poorest the worst, but others will be affected. It will hurt those who are just about managing, and it will hurt those on middle incomes.”
He admits that Cuckoo can’t promise never to raise its prices, “but we’ll always be honest and transparent, and we will never tie people into opaque contracts with extortionate exit fees”.