Ofcom has revealed that Virgin Mobile, Tesco Mobile, O2, Vodafone and EE will offer special plans to their out-of-contract customers in the UK.
Three has refused to apply any discount to its out-of-contract customers. Three’s mobile customers will continue to overpay and will not receive similar protections if they stay on their current deal.
1.4 million customers are overpaying, on average, just under £11 per month more than if they switched to a comparable SIM-only deal. This translates into a total figure of around £182 million per year.
Virgin Mobile will move its out-of-contract customers to the equivalent 30-day SIM-only deal.
Tesco Mobile will reduce the monthly charges of out-of-contract customers who are overpaying to the best available airtime tariff.
O2, a part of Telefonica, will reduce the monthly price of its out-of-contract customers to the equivalent 30-day SIM-only deal. This will apply to its direct customers only, but O2 will discuss options for customers who take out O2 contracts with third-party retailers.
Vodafone and EE will reduce their prices for customers out of contract for more than three months. Both companies will confirm the level of this discount before the end of the year.
“We expect their discount to take into account the level of savings available if customers switched to a comparable SIM-only tariff. All of the discounts will come into effect by February 2020,” Ofcom said in a statement.
Under the new EU rules, which must be implemented by the end of next year, mobile customers entering into a bundled contract will be told the cost of buying the handset and airtime separately.
Mobile customers are turning to split contracts – with separate contracts for the handset and airtime. Ofcom has proposed rules to ban mobile operators from linking split contracts where the handset contract is longer than 24 months.
Bundled contracts have dropped as a proportion of pay-monthly contracts from 74 percent in 2014 to 46 percent in 2019. 12-month SIM-only contracts have grown from 15 percent to 34 percent during this period.
Split contracts have quadrupled in the last four years, from 4 percent in 2014 to 16 percent in 2018.