'Rollover' mobile phone deals face ban
Automatic renewals for landline contracts will be ended by new year
Published 19/09/2011 | 00:00
Hundreds of thousands of landline and broadband customers may soon be able to get a better deal on their services.
The good news for consumers is that so-called "rollover" contracts will soon be made illegal.
The rollover happens when a company renews a contract automatically unless the customer actively opts out, locking them into the deal for another period.
Ofcom, the telecommunications regulator, has said the sale of these rollover contracts - which are unfair to consumers - will be banned from December 31.
The Belfast Telegraph understands there are approximately 100,000 people in Northern Ireland affected by the arrangements.
Also known as Automatically Renewable Contracts (ARCs), rollover deals are unjust because they tie subscribers into a new minimum term and the provider can currently charge a penalty fee if the customer later decides to leave for a better deal.
Ofcom Chief Executive, Ed Richards, said the watchdog's research had found rollover contracts to be uncompetitive.
"Ofcom's evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit," he said.
BT is the largest communications provider currently offering rollover contracts.
A spokeswoman for the company last night said BT was "disappointed" that Ofcom has decided to ban renewable contracts.
She said: "Our customers tell us they are happy with the discounts offered and we don't believe there is any evidence they damage competition, given the UK telecommunications market is amongst the most competitive in the world."
So-called 'rollover' deals that tie consumers into a successive contract on expiry will be illegal from December. 100,000 people in Northern Ireland, who are thought to be subject to these agreements, will be able to benefit from cheaper deals as a result of the ruling by the Office of Fair Trading (OFT). BT, the largest provider of such contracts, said it was "disappointed".