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Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

One in three households is paying over the odds for their broadband package, thanks to sneaky out-of-contract prices, according to new figures from uSwitch.

At the end of a fixed deal most broadband providers will hike the monthly price unless you move to a new deal, costing customers an extra GBP9.96 a month on average for the same service.

The comparison site’s research of just over 2,000 customers, also showed that 15 per cent of mobile phone customers fall into a similar trap, paying an average GBP8.17 per month extra compared to moving to a SIM-only deal after their handset’s contract term ends.

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

Broadband: Sneaky out of contract prices could be costing you dear

Any households with expired broadband and mobile contracts could therefore be overpaying by a combined GBP17.84 a month, the equivalent of GBP214.08 over the course of a year.

Over eight million broadband customers and three million mobile customers on pay-monthly contracts that bundle in a handset as well as talk time and data are estimated to be on expired deals, according to the comparison site, if its figures are applied to the whole country.

Comparison site, uSwitch, calculated this would mean a combined cost to UK households of GBP41 every second, or GBP108 million a month.

You won’t be told your contract is due to end

There is no obligation for broadband and mobile companies to tell you when an existing contract is due to end – something 79 per cent of customers wrongly believe.

This means it can easily pass households by, and as many as 25 per cent of people have been on the same broadband contract for more than three years, shelling out hundreds of pounds more than they need to.

A bumper 45 per cent of households, who are unaware their broadband contract has ended, don’t know what date it finished.

If they knew, 89 per cent said they would try to move to save money.

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

Four in ten of these would search for a cheaper deal, while 47 per cent would contact their existing broadband provider to try to negotiate a better price.

Richard Neudegg, head of regulation at uSwitch, said: ‘It is simply not right or fair that consumers lose out on savings or the opportunity to upgrade to a better service because telecoms rules haven’t kept pace with other sectors.

‘Getting an end of contract notification is standard practice in so many other industries as a very basic measure to help keep consumers in control. The research suggests many users may simply assume it’s the same with telecoms.

‘If Ofcom were to introduce end of contract notifications – something they have the power to do – our research shows 89 per cent of customers receiving them would be prompted to consider the quality and value of their service.

‘We believe it is time providers do the right thing by their customers and start sending end of contract notifications as standard.’

In response, a spokesperson from Ofcom said: ‘We want to ensure people can take full advantage of the deals out there and easily move to contracts that suit them best. So we’ve announced plans to help people shop around, which includes looking at end of contract notifications.

We’ll provide details soon, and will consider uSwitch’s findings carefully.’

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

Top of the line: A large proportion on pay-monthly bills are for your handset so make sure to switch once your contract ends to avoid paying money for nothing

Make sure you never overpay again

Vix Leyton, consumer expert at Broadbandchoices.co.uk, advises: ‘Do not languish on old contracts. When you sign up, you’ll be told how long you’re tied in and the contract will go on to detail what happens when you reach the end of that period.

‘Providers typically reserve their best deals for new customers so shopping around will allow you to access prices and perks on offer, plus some packages actually increase in price once your contract expires, so this safeguards you against that.

‘Act fast. And know what your cancellation rights are at the end of the contract – some providers require 30 days’ notice that you won’t be continuing before auto-renewing or moving you to a rolling contract.’

TOP BROADBAND DEALS

Provider

Speed (up to)

Contract length

Upfront costs

Monthly cost

Out-of-contract price

First year cost

Offer

17 Mbps speeds

38 Mbps speeds

17 Mbps speeds with TV

Sky Broadband Unlimited [1] 17 Mbps 12 months GBP9.95 GBP18.00 GBP28.99 GBP225.95 GBP50 Reward Card
Plusnet Unlimited Broadband[2] 17 Mbps 12 months GBP0.00 GBP19.99 GBP28.98 from month 13 GBP189.88 GBP50 cashback and no activation fee
TalkTalk Fast Broadband[3] 17 Mbps 12 months GBP0.00 GBP19.95 GBP27 from month 13 GBP239.40 No set-up fee
Vodafone Unlimited Fibre 38[4] 38 Mbps 18 months GBP0.00 GBP20.00 GBP25 from month 19 GBP240.00 Market leading Fibre deal
Plusnet Unlimited Fibre[5] 38 Mbps 12 months GBP15.00 GBP24.99 GBP33.98 from month 13 GBP314.88 GBP10 off activation fee
TalkTalk Fast Broadband + TV Plus Box[6] 17 Mbps 12 months GBP50.00 GBP26.95 GBP34 from month 13 GBP373.40 No set-up fee
Sky Entertainment + broadband unlimted[7] 17 Mbps 18 months GBP29.95 GBP38 GBP48.99 from month 13 GBP485.95 Cut price TV
Source: Broadband choices

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

The best way to ensure you are not paying over the odds is to run a comparison search using your postcode to see the best deals.

This is Money has a broadband finder tool,[8] powered by our expert partner service Broadband Choices, (right) you can use to do this in seconds.

Once you have switched set up a reminder in your calendar immediately of the date your contract ends.

Alternatively some comparison sites, including broadband choices have reminder tools that will do this for you.

If you are concerned about the perceived hassle of switching provider you should still call your provider and quote the best deals you can find elsewhere to negotiate a better deal from them.

How to change network and keep your number

In order to change networks and keep your mobile number all you need is a PAC – a porting authorisation code.

Leyton explains: ‘Your network will probably encourage you to speak on the phone so they can try to keep you as a customer.

‘However, Ofcom says they must give you your PAC if you want it, and it has to be issued to you immediately over the phone or within two hours in a text message, and they mean business.’

All you need to do is supply the code to your new network and your existing number will be switched over.

Your PAC lasts for 30 days, after that you will need to request a new one.

What about your mobile?

Bundling the costs together is typically more expensive than taking out a Sim-only deal and buying your handset outright.

But for most a pay-monthly mobile contract is the most affordable way to spread the cost of today’s eye-wateringly expensive smartphones.

Once your 24-month deal ends though, your bill won’t change automatically to take account for the fact that you have cleared the cost of the handset.

Four in ten mobile customers would get in touch with their provider to ask for a cheaper deal if they knew they were out of contract, according to uSwitch, and over a third (35 per cent) would compare prices themselves to see if they could get a better deal.

Vix Leyton of Broadband Choices says: ‘While it can feel like the best way as it means no upfront payment, this can be a double sting, as many stay with their provider beyond the terms of their contract waiting the next new handset and continuing to pay the same price, which can literally be the equivalent of paying money for nothing.

‘If you’re happy with the phone you’ve currently got or are simply not impressed by any of the new models on the market, then you could be much better off making an immediate switch to a SIM-only solution while you plan your next move. These contracts offer much more flexibility and often come with similar benefits to traditional contracts, from unlimited data plans, to roaming.’

TOP SIM-ONLY MOBILE CONTRACTS

Provider

Data/ calls/ texts package

Monthly cost

Contract length

Total contract cost

Free gift

Three[9] 12GB/ unlimited/ unlimited GBP14.00 12 months GBP168.00 Gobinge – free streaming
Virgin mobile[10] 5GB/ 5000/ unlimited GBP9.00 12 months GBP108.00
Smarty mobile[11] 2GB/ unlimited/ unlimited GBP7.50 1 month GBP7.50 Discount on unused data
giffgaff[12] 4GB/ 750/ unlimited GBP12.00 1 month GBP12.00
Vodafone[13] 20GB/ unlimited/ unlimited GBP20.00 12 month GBP240.00
Source: Broadband choices

THIS IS MONEY’S FIVE OF THE BEST BROADBAND DEALS

Sky’s Unlimited Broadband deal is the cheapest deal available at GBP18 per month. Plus new customers get a GBP50 prepaid Mastercard. the contract lasts 12 months, after that the price jumps to GBP28.99, 19.95 setup fee applies.

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

NowTV’s Brilliant Broadband Combo deal comes with Sky movies and Entertainment channels. It comes with connection speeds of up to 17Mbps and costs GBP29.98 per month with a GBP22 setup fee on a 12-month contract.

After that the price jumps to GBP34.98 per month

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

Talk Talk’s offers a Fast Broadband package with 17 Mbps speeds with a TV Plus box which allows you to record, pause and rewind live tv plus 6 Sky Entertainment channels It costs GBP18.95 a month with a GBP25 upfront cost.

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

Virgin Media’s Vivid 100 Fibre Broadband and Talk Weekends deal comes with up to 100 Mbps speeds. It costs GBP37 per month on an 12 month contract. GBP20 setup fee applies. At the end of the contract the price jumps to GBP53 per month

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

BT offers Sky Sports and BT Sports bundled with a 52Mbps broadband package and a GBP95 prepaid Mastercard reward for GBP60.99 per month on an 18 month contract.

GBP59.99 set up fee applies.

Are you shelling out £214 more than you need to for mobile and broadband? How high out-of-contract prices catch out millions of customers

References

  1. ^ Sky Broadband Unlimited (www.broadbandchoicespartners.co.uk)
  2. ^ Plusnet Unlimited Broadband (www.broadbandchoicespartners.co.uk)
  3. ^ TalkTalk Fast Broadband (www.broadbandchoicespartners.co.uk)
  4. ^ Vodafone Unlimited Fibre 38 (www.broadbandchoicespartners.co.uk)
  5. ^ Plusnet Unlimited Fibre (www.broadbandchoicespartners.co.uk)
  6. ^ TalkTalk Fast Broadband + TV Plus Box (www.broadbandchoicespartners.co.uk)
  7. ^ Sky Entertainment + broadband unlimted (www.broadbandchoicespartners.co.uk)
  8. ^ broadband finder tool, (www.thisismoney.co.uk)
  9. ^ Three (www.broadbandchoicespartners.co.uk)
  10. ^ Virgin mobile (www.broadbandchoicespartners.co.uk)
  11. ^ Smarty mobile (www.broadbandchoicespartners.co.uk)
  12. ^ giffgaff (www.broadbandchoicespartners.co.uk)
  13. ^ Vodafone (www.broadbandchoicespartners.co.uk)

How to save money on broadband and mobile phones

How much do we spend?

As our 24/7 reliance on technology has increased, so have the costs. According to the communications regulator, Ofcom, the average household spend on home phones, broadband and mobiles now stands at ?85.25 per month. According to Broadbandchoices.co.uk, customers switching broadband suppliers could save up to ?336 a year by getting the best deal, while Citizens Advice suggests mobile phone firms are selling customers contracts that cost on average 130% more than they need to.

Three simple must-dos

1 Try asking your current provider for a better deal If you don’t want the hassle of switching mobile phone or broadband providers, simply ask for a better deal. To succeed, you’ll need to be out of your minimum contract and preferably armed with information about cheaper deals from rival providers. Your aim should be to either get your existing package for a better price, or to get a better tariff for the same money. If your provider doesn’t budge, threaten to leave. More often than not you’ll be transferred to its cancellations – aka retentions – department. Here, staff have the power to offer better, unpublicised deals.

2 Don’t languish on old contracts Mobile phone and broadband contracts both tend to be for 12, 18 or 24 months. When you reach the end of your contract, obviously it may well pay to shop around for a better deal.

Broadbandchoices.co.uk has a service that reminds you when your contract is up. Providers typically reserve their best deals for new customers – so shopping around will allow you to access the better prices and perks on offer, says Vix Leyton from the site.

3 Don’t overpay It may sound obvious, but don’t pay for more than you actually use on any contract. Billmonitor has a tool that analyses your mobile phone usage and matches you to a better new contract. Light users might even find that a contract is not for them and they’d be better off on pay-as-you-go. The same goes for broadband deals, especially if you bundle in a TV service too. Do you really need 200-plus TV channels? Probably not.

Five easy ways to save

1 Question the need for speed Fibre optic broadband offers faster speeds than old-style ADSL but consider whether you really need a super-speedy connection. Virgin Media offers fibre optic up to 200MB – but you’ll only really need this if the whole household piles onto broadband at the same time, downloading films and gaming online. A 17MB connection will be adequate for most people – and cheaper.

To speed up a sluggish connection, upgrade your router and connect your desktop to the router via an ethernet cable rather than wifi.

2 Use your mobile for all calls Most mobile phone contracts include hundreds of minutes of calls, or unlimited calls, to other UK mobiles and landlines. Using your mobile for all your calls can negate the need to pay for calls on your landline.

3 Split handset and tariff According to HandsetExpert.com, customers are wasting an average of ?92 a year on smartphone contracts when they’d be better off buying a handset outright and pairing it with a sim-only tariff. If your phone’s working fine, try and resist the urge to upgrade it every time a new model comes out. There are some pretty cheap sim-only deals available – TPO has a rolling one-month contact offering 1GB data, 500 minutes and unlimited texts for ?3.99 a month.

4 Bundle vs unbundle Sky, BT, Virgin Media and TalkTalk all offer bundles where you pay a monthly price for a phone line, broadband and a selection of TV channels (sometimes you can add a mobile too). But although it might be convenient, it might not be your cheapest option. MoneySavingExpert compares bundle prices with “unbundled” deals where you take different services from multiple providers. It also takes into account sign-up bonuses from providers to give a total cost for the first year of the contract. For instance, pairing a Sky, EE or Plusnet line rental and broadband deal with a Now TV pass is cheaper than any triple-play bundle on the market.

5 Use a cashback website If you decide to switch either mobile or broadband suppliers, it’s worth doing so via a cashback site. Topcashback and Quidco pay a reward when you click through from them to buy goods or financial products.

In general, the more pricey the contract, the more cashback you’ll get. To give you an idea, Topcashback is offering up to ?175 if you take out a BT quad-play bundle of broadband, calls, BT TV, and a sim-only mobile deal. But even just taking out a ?12 a month sim-only deal with Three can net you ?60 cashback – almost halving the cost for the year.

Advanced money-saving tip

Recommend a friend Virgin Media will knock ?50 off your bill if you’re a cable customer and refer a friend who signs up – they get ?50 off their bill too. You can make up to 25 referrals in any 30-day period. Sky’s deal is similar. Plusnet’s scheme gives customers a monthly discount for every person who joins following their recommendation. It varies on the product, but is normally 50p or 75p off their bill for each month the friend stays on as a customer.