Telephone warning for start-ups and all small businesses

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When we start our shiny new businesses we are eager to get all the basic services in place, and these days that includes our telephone and broadband services.

Read the small print

It is tempting to choose the best price over recommendations from others. After all, cash flow is important. What you need to know is that the telecoms giants may expect you to agree a contract for twelve months or longer. You might say that is fair enough. After all, most business customers would expect to be tied for a reasonable term to make it worthwhile. Make sure you don’t find yourself or your business being billed for a penalty charge when you give notice that you wish to change provider.

Unfair competition

You may find that your business is supposedly on a twelve month rolling contract, which probably means that you have to give twelve months notice of termination, especially if you are within the first two years or so of your contract. If you don’t, the telecoms company will expect to make a penalty charge for taking your services away. Yet how can you give twelve months’ notice in the expectation of shopping around in nearly a year’s time? Would you not worry about continuation of service? A loss of service is every business’s nightmare.

Hope on the horizon

Fortunately, the rules may be about to change. The UK regulator, OFCOM, stated via press release on 3rd March this year:

“Ofcom is concerned that rollover contracts make it harder for customers to switch providers and consequently reduce the benefits of competitive choice.
For individual customers, this can mean that switching is made unattractive as the costs involved are unexpectedly high.

For the market generally, it means less competition as it is harder for competing providers to attract customers on rollover contracts and therefore their ability and incentive to create lower cost and higher quality services is reduced.

Ofcom is proposing to amend its existing rules in relation to contract terms to prohibit opt-out contract renewals in any form in the land-line and broadband sectors.”

Caveat emptor

The messages to take are:

  • Be very careful of the conditions of any contract with a telecoms provider.
  • Complain to OFTEL if you find yourself in a rolling contract with a penalty clause if you don’t give a long period of notice.
  • As with all purchases, take care. Buyer beware!

I would be very interested to know if you have had this sort of problem with a telecoms company and how you managed to resolve it. Is this a problem in countries other than the UK?

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