Broadband companies punish loyal customers, says Citizens Advice

It should come as no surprise to anyone who has ever paid for broadband that the price you see on your bill a few years down the line appears completely removed from the original deal you signed up to. It’s conventional wisdom that to get the best deal you have to shop around every time your contract ends, but the extent to which loyal customers are punished has been revealed by the Citizens Advice charity, which reports an average increase of 43% after the initial deal expires.

This “loyalty penalty” amounts to an average increase of £113 per year, and is a five-fold increase on the same figure customers paid in 2011 to stick with their existing contract. Citizens Advice claim that a third of customers aren’t aware of the increase, and that older and poorer customers are less likely to shop around for a new deal. Indeed, in the Citizens Advice study of 3,000 consumers, they found broadband subscribers over 65 to be more than twice as likely as younger customers to have stuck with the same supplier for over a decade, despite price hits.

“Loyal broadband customers are being stung by big price rises once their fixed deal ends,” Citizens Advice chief executive Gillian Guy told the BBC. “The government has rightly put energy firms on warning for how they treat loyal customers – the actions of broadband firms warrant similar scrutiny.”

Of the UK’s five biggest broadband suppliers, four of them had price bumps after an initial honeymoon period, according to the Citizens Advice research, with Virgin Media the only exception. The price increases were as follows:

• BT 12-month contract: £198 (67% increase)
• Sky 12 months: £120 (53% increase)
• EE 18 months: £90 (36% increase)
• TalkTalk 24 months: £66 (28% increase)

For now, the best way of dodging this “loyalty penalty” is simple, but tedious: keep an eye on contract expiry dates, and don’t be afraid to switch providers once the honeymoon period is over. Do the extra legwork once every couple of years, and you should make a substantial saving in the long run. So much for loyalty, eh?

Image: Sean MacEntee used under Creative Commons