Older people in the UK are most at risk from broadband price rises because they are unwilling to switch telco providers, new research suggests.
A study by UK broadband provider Zen Internet indicates that 83 per cent of broadband users aged 55 and over had not switched provider in the last year, if ever.
As a result, they are leaving themselves ‘at the mercy’ of price rises at the end of their contract when they could be getting a better deal elsewhere, it claims.
Every day, 25,000 broadband customers come to the end of their contract, which usually leads to an automatic price hike as they continue on a monthly rolling deal.
New rules introduced in February mean phone, broadband and pay-TV customers must now be alerted when their current contract is coming to an end, which could save households at least £150 a year.
Britain’s over 55s are leaving themselves at the mercy of end of contract broadband price hikes over a reluctance to switch providers, research from Zen Internet has found
According to Ofcom figures released earlier this year, about 20 million customers in the UK are already out of contract – including 8.8 million broadband customers – with many spending more than they need to.
Collectively, 9 million Brits are overpaying £1 billion for their broadband and TV services, as prices jump by around 28 per cent when initial contracts end.
‘For years the broadband industry has taken advantage of consumer inaction and fears of switching by hiking up prices at the end of contracts and sometimes even during – the so-called “loyalty tax”‘, said Richard Tang, founder and chairman of Zen Internet.
‘While recent Ofcom legislation has made it easier for everyone to be more aware when their contract is ending, most providers will still bump up the cost if consumers don’t act.
Zen´s research suggests fears over switching broadband providers are unfounded in many cases
‘Even in today’s climate, consumers should not be afraid to search for the best provider – one that will deliver a great and reliable service, and avoid the price increases that can add up over time.’
Zen Internet surveyed more than 2,000 people with broadband aged 16 and over in the UK in mid April this year.
Four in five respondents in the over 55-and-up category – or 83 per cent – have not switched within the last year, if ever, it found.
In contrast, 55 per cent of respondents aged between 16 and 24 had switched providers in the last year.
Receiving a worse service than the one from their current broadband provider was the top concern for over 55s, cited by 43 per cent of respondents in this age group.
Overall, among all age groups, 36 per cent of those who had not switched said it was because they feared they would get a worse service elsewhere.
Surveying more than 2,000 people with broadband, more than four in five respondents (83%) in the 55+ category have not switched within the last year, if ever
However, ‘customer apathy’, or simply not being bothered, is also to blame for not switching, Zen Internet said.
More than a third of respondents – 35 per cent – had previously seen the benefits of an alternative supplier but still did not switch.
This figure increased to more than half, or 52 per cent, for under 24 year olds, suggesting the UK’s youngest customers are more apathetic when it comes to their broadband account.
Despite this, as much as 89 per cent of those who have switched broadband providers said they benefited from making the switch.
Some of the multiple benefits cited include a cheaper deal (48 per cent), better reliability (32 per cent), more value for money (28 per cent) and ease of switching (18 per cent).
Nearly half – 46 per cent – of those asked also said they found the switching process easier than expected.
Around 9 million Brits are collectively overpaying £1 billion for their broadband and TV services, as prices jump by about 28 per cent when initial contracts end
Despite perceived fears among UK consumers about switching, only 10 per cent found the process harder than they imagined.
This figure dropped to just 7 per cent for over 55 respondents who have switched broadband supplier before – suggesting the UK’s older generations have little to worry about in terms of ease of switching.
The biggest trigger points for switching were that respondents saw a better deal (32 per cent), needed to save money (28 per cent) or were moving house (21 per cent).
Meanwhile, a guarantee of no price hikes and being offered the same deals as new customers – both cited by 41 per cent – were the top reasons consumers would stay with a broadband provider.
However, Brits are more likely to switch energy providers than change their broadband supplier, with 38 per cent changing energy company in the last year, compared to 32 per cent seeking another connectivity provider.
Zen Internet cited the current coronavirus lockdown, which has forced millions of people to work from home, makes a decent and affordable broadband connection all the more important.
‘Reliable broadband should be a given, but sadly some consumers are in the unfortunate camp of receiving poor and patchy service at a time when it’s needed the most,’ Tang said.
‘Despite the current situation, switching is as simple as it’s ever been and those out of contract should be looking to make that change now.
‘For those still in contract, it’s useful to be aware of when the contract is coming to an end so they can be prepared to move when it does.’
Tang said providers should make switching a straightforward process and trust that customers will stick with them out of choice because they offer the best service.
As part of Ofcom’s new rules, introduced in February, providers will need to tell customers when their contact is up and what they have been paying until now, as well as what price they can expect to pay once their contract is over.
Home telecom firms must inform bill payers between 10 and 40 days before their contract comes to an end via a text message, email or letter.
The notification must also state any notice period for leaving their provider and the best deals available, and also reveal any prices only available to new customers.
The average broadband customer could save around £100 a year as a result of the changes, though some could save £150 or more, according to Ofcom research.
It believes around three million people could actually pay less by upgrading to a faster broadband package.
While there should also be no pressure to switch, it’s crucial that consumers are aware of the best deals available to them, according to price comparison site Uswitch.com.
Uswitch had spent ‘years’ campaigning for the new rules, which should put an end to the ‘murky practice’ of automatic price hikes.
‘When you receive this information, it is worth remembering that you don’t have to accept the deal on offer as it may not be the best option for you in the market,’ said Richard Neudegg, head of regulation at Uswitch.com.
‘To ensure you are getting the best possible deal for your needs and, armed with details of how much you are going to be paying, it is a good idea to run a quick comparison to see what other providers are currently offering.
‘It’s not just about price, though – if you’re on an outdated connection, switching provider is also a great opportunity to move to a faster service.
‘Don’t wait for a letter to drop through your front door if you know you are out of contract – get online now and start researching what deals are available, even if they are with your current provider.’
OFCOM’S NEW BROADBAND CONTACT RULES
Phone, broadband and pay-TV providers will be forced to alert people when their current contract is coming to an end under new rules introduced this year.
The new rule from regulator Ofcom, which came into effect mid February, could save some households more than £150 a year.
Ofcom says around 20 million customers are already out of contract – including 8.8 million broadband customers – with many spending more than they need to.
It claims that every day, 25,000 broadband customers come to the end of their contract, usually leading to an automatic price hike.
However, 16 per cent of broadband customers do not know if they are in contract, particularly older people, with 21 per cent of over-55s unaware.
Measures introduced by the regulator will mean that home telecom firms must inform bill payers between 10 and 40 days before their contract comes to an end via a text message, email or letter.
Under the new rule, providers will need to tell customers when their contact is up and what they have been paying until now, as well as what price they can expect to pay once their contract is over.
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