James Delahunty
21 Jun 2010 1:17
Major providers of landline telephone services in the UK will be cutting fees charged to customers who break contracts early following pressure from the telecommunications regulator, Ofcom. The providers will cut "early termination" charges by up to 85 percent.
The one-off fees will reportedly fall from as much as £33 to just £2 in cases. The major providers have made the commitment to the cuts, while Ofcom has warned smaller providers to follow suit, or face the consequences. "We very much welcome the reductions made by BT, TalkTalk and Virgin Media which mean that consumers will face much lower charges if they wish to end their contracts early," Ofcom said in a statement.
The regulator has been investigating the fees for 18 months. Customers that ended deals early had to pay charges supposedly based on the money they would have had to pay under the remaining term of the contact, but Ofcom argued that firms weren't taking into account that they would no longer need to bear the cost of supplying service to a household that leaves early.
BT doesn't see it that way. "If a customer leaves within the minimum contract period that they signed up to, they are charged the amount we expected to receive from them, less the costs we save as a result of them leaving early, as this is what we are legally entitled to," said a BT spokesman.
The company will still work with Ofcom to reduce charges for landline (or landline plus broadband) to help reach an "industry-wide agreement on charges."