Are your communications all tied up?

Automatically renewable contracts that tie companies with landlines (to repeated minimum contract periods) unless they opt-out are to be banned under proposals being considered by Ofcom.

These contracts known as rollover/ evergreen contracts, are currently offered by a number of telephone companies, including the UK’s Largest supplier; BT. The contracts automatically roll forward to a new minimum contract period – with penalties for leaving – unless the business actively opts out of the renewal at the most appropriate time (usually within a small time frame).

Ofcom estimates that approximately 15% of businesses are on rollover contracts, with most unaware of the actual contractual terms they are committing to. Furthermore, rollover contracts can make it very diffi cult to switch providers whilst avoiding “early termination charges”, which can be 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.

If Ofcom proceeds with its proposals, providers who continue to offer this type of contract could face enforcement action including a financial penalty of up to ten per cent of turnover.

However this proposal is only to be applied to Residential users and businesses with fewer than 10 employees, which still leaves most businesses exposed to “roll-overs”.

Expense Reduction Analysts are very experienced in this area and can ensure that their clients fully understand their commitments and we can manage the contracts “headache”, minimising/ eliminating early termination charges and maximising savings opportunities.

Contact your Communications Team member to discuss your requirements in greater detail.