To renew or change supplier?

The purpose of this page isn’t to tell you to renew or change broadband suppliers. That’s a decision you’ll need to make for yourself. Instead, we’ll give you a quick run down of what you should take into account

Is renewing broadband contracts important?

Change supplier or renew contracts?It certainly can be. Ofcom’s own recent pricing review found that customers who change broadband supplier saved an average of £108-£120 (over a year) by doing so!

Renewing your broadband contract isn’t something you would have thought about when you started out with your existing broadband supplier, and it’s something many customers forget about until they check their bank statements. Once you go past your minimum contract term, which usually includes a heavily discounted price, your broadband costs will generally jump up significantly.  If you pay by direct debit and don’t check your bank statements regularly it’s quite possible you won’t notice the difference for months, if at all. It should be said straight away that this isn’t a dodgy practice, and it’s not unusual.

Why have my broadband prices gone up?

Most broadband suppliers offer discounted deals to attract new customers. These deals are great for new customers but not so good for the supplier, as the deals will generate very little or no profit at all. Their profit arrives after the discounted period ends and you start paying higher ‘out of contract pricing’. You will have been told the out of contract pricing when you signed up, but almost nobody ever remembers this. Once you reach the end of your minimum term it’s time to think about whether to renew or change suppliers.

What are my choices after the minimum term passes?

In simple terms you have 3 choices:

  • Continue as you are. If you don’t renew a contract your broadband won’t just stop. You’ll continue to receive the same service, but at the out of contract pricing you originally agreed to. Your contract doesn’t end, it just changes, usually to a rolling 30-day status. No supplier can renew your contract for another fixed term without your specific agreement.
  • Renew for another xx months. Your broadband supplier will most likely offer you a better price than the ‘out of contract’ price if you agree to renew your contract and start another 12-18 or 24 month minimum term. When you do this they can rely on a fixed revenue stream for that duration, so will usually offer you a better rate.
  • Change broadband supplier. If you’re not happy with the service you’ve been getting or you’re not happy with the pricing you’ve been offered, you can look at the broadband deals currently on offer and simply change supplier. As a general rule it’s simply a case of signing up with a new supplier. The new provider will usually deal with everything else for you, including advising your existing supplier that you want to end their services.

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What about the new Ofcom rules about broadband contracts?

The good news for customers is that Ofcom have introduced new rules which should mean that those customers who don’t shop around still get a better deal. On the back of these new rules some providers have agreed to cap price increases for those out of contract and for those who renew contracts. In future, suppliers will have to warn customers when their contract minimum terms are due to expire. It’s probably fair to say that while these changes brought in by Ofcom may save you money, you’ll still save more by switching to a better deal once your contract ends.

Regardless of this it will always be your responsibility to decide whether to renew or change suppliers and make sure you get the best deal possible.

Not all rules benefit customers

Knowing how broadband suppliers make a profit, our own opinion is that some of Ofcom’s rules may have unintended consequences. If companies are restricted in how much they can increase prices when a discount period ends, logic suggests many will start increasing prices for new customers, to allow for profitability during the initial period, and stop offering shorter term contracts too.