Ofcom to review consumer media switching
Wednesday, December 9 2009, 13:35 GMT
By Andrew Laughlin,
Ofcom has revealed an increase in consumer takeup of bundled communications deals, but also pledged to review the regulations around switching between providers.
According to the regulator's annual Consumer Experience report, 35% of users opted for bundled deals - pay TV, landline and broadband - in 2008, up from 30% in the previous year.
The UK was found to have much better bundled deals on offer compared to the US and parts of Europe, with some consumers able to save up to £140 a year by taking combinations of services from a single provider.
However, Ofcom found that the portion of people switching between providers for a better deal actually dropped from 24% in 2007 to just 13% last year. The watchdog noted that the figure was way below comparable levels for the energy or car insurance sectors.
The regulator has therefore launched a review of bundled communications services, including the regulations governing consumer switching between providers. The review will particularly focus on the impact of automatically renewable contracts, in which the terms are automatically continued unless the consumer stipulates otherwise.
As early termination charges often apply for consumers who want to leave their contracts during the minimum period, Ofcom intends to review the validity of this approach. It will publish further communication on the review in 2010.
"Takeup of communications services keeps growing and consumers are becoming smarter at finding the cheaper deals available by choosing bundled services or switching from standard annual contracts," said Ofcom chief executive Ed Richards.
"Ofcom will continue to work to make sure that there are no unnecessary obstacles to prevent consumers from switching and to promote effective competition in communications markets."
The report also revealed that around a fifth of mobile users opted for SIM-only contracts during the first three quarters of 2009, as the economy continues to prove challenging.
A further 42% of consumers took mobile contracts of over 24-months in duration, which usually carry major savings.