People who want to leave their landline or broadband contracts early are set to pay lower charges, after Ofcom agreed a cut in fees with the three largest landline providers.
BT, TalkTalk and Virgin Media will reduce their fees for early termination, the telecoms watchdog said on Thursday. TalkTalk introduced its new charges on 1 June, except for its Tiscali brand, which will introduce them on 1 November. Virgin Media and BT will start using the lower fees in October.
"BT, TalkTalk and Virgin Media do not believe their early termination charges were unfair. But, after constructive discussions, they have agreed to significantly reduce those charges for landline (or landline plus broadband) services," Ofcom said in a statement.
Some of the reductions bring a drop of more than two-thirds. For instance, one TalkTalk Essential telephone and broadband bundle will fall from £33.48 per month to £8 per month, Ofcom said. In addition, Virgin Media's charge for leaving one of its Broadband L & Phone M bundles will fall from £29.99 per month to £6.63 for the first month and £4.63 for each remaining month.
Early termination charges are based on the number of months remaining on the user's contract. The monthly fees will vary between telcos because each has different costs to take into account, the regulator said.
Ofcom said the principle behind the reductions is that customers should never be charged more than the payments remaining under their contract. In fact, they should often pay less, to reflect the costs providers save because of early termination. This is to make sure that the telcos comply with the Unfair Terms section of the Consumer Contract Regulations 1999, the regulator said.
The cuts affect two broadband and telephone bundles from TalkTalk and three bundles from Virgin Media, Ofcom said. BT is also cutting its early termination charges, but only voice packages are affected.
Virgin Media currently offers 12-month minimum contracts on its landine and broadband bundles, while BT and TalkTalk offer minimum contracts of 18 months for their bundles.
Ofcom said other landline providers are expected to introduce similar reductions, or they could face formal enforcement action.