Telecoms contracts - Automatic Renewal Provisions
Ofcom, the independent communications industry regulator, last month published its decision to amend its General Conditions (applicable to all communications networks and service providers) to prohibit automatically renewable contracts in respect of both landline and broadband services for small business (businesses with up to 10 employees) and residential customers.
Automatically renewable contracts include any contracts which, at the end of a minimum contractual period, roll over or renew unless the customer takes active steps to notify their supplier that they want to prevent that roll over or renewal (i.e. a failure to take action results in a further contractual term). Ofcom has classified these contracts as an obstacle to customers wishing to switch between suppliers, leading to decreased competition in the relevant markets.
The new prohibition will come into force on 31 December 2011 and will apply to all new contracts entered into after that date. During the period between 31 December 2011 and 31 December 2012 suppliers will be required to take steps to completely remove automatically renewable contracts from all small business and residential contracts.
If you would like any more information about this area, please contact John-Paul Martin.