The regulator also received commitments from mobile operators to reduce customers’ bills.
Background: Ofcom has recently worked on measures to ensure telecoms customers enjoy a fair and transparent treatment from their providers. In September 2018, the regulator proposed that mobile operators break down the cost of the different parts of a mobile package, so that consumers have a better understanding of what they are paying for, including the cost of a handset; and to move customers automatically to a SIM-only tariff once the initial contract has expired.
What changed since then? Since Ofcom presented the initial proposal, the new European Electronic Communications Code has been passed, which includes some of the measures to address the concerns identified by Ofcom. The new EU rules provide that mobile customers entering into a bundled contract will be told the cost of buying the handset and airtime separately. These need to be implemented by the end of 2020; Ofcom will aim to introduce these provisions for UK customers as quickly as possible. However, the EU rules fail to give regulators the power to impose default tariffs, thereby ruling out forcing a switch to SIM-only deals. To make up for that, Ofcom is now proposing to ban mobile operators from linking ‘split contracts’ (like those for the handset and for the airtime) when the handset contract is longer than 24 months.
Ofcom also obtained commitments from MNOs: The regulator challenged the industry to take action, so that consumers can see benefits before any new rules are introduced. Virgin Mobile and O2 will move out-of-contract customers to the equivalent of a 30-day SIM-only deal; Tesco Mobile will reduce the monthly charges to the best available airtime tariff; Vodafone and EE will apply discounts to customers out of contract for more than three months. Only Three has so far refused to commit to any price reduction for out-of-contract customers.
