BUSINESS MATTERS
Contract model changes A
The use of automatically renewing contracts (ARCs) has been the contracting model of choice for communications providers with their end users. This practice must, however, now change following a recent announcement by Ofcom, explains Martine Nathan, Partner at Teacher Stern Solicitors.
RCs are contracts which automatically roll forward to a new minimum fixed length contract, with the customer actively having to opt out of the automatic renewal. Often the customer is also required to effect such an opt out within a very limited time. During the minimum contract period a customer is usually subject to an early termination charge if they want to end the contract and switch supplier.
Ofcom’s Chief Executive, Ed Richards, said, ‘Ofcom’s evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit. Our concern about the effect of ARCs and other ‘lock in’ mechanisms led to our decision to ban them in the communications sector’. Accordingly, Ofcom has announced that: • The sale of ARCs for fixed line and broadband services to consumers and small businesses with no more than ten employees will be banned from 31 December 2011. • Communications providers are required to move all residential and small business customers currently on rollover contracts to alternative deals by 31 December 2012. • All ARCs are to be completely removed from the market by 31 December 2012.
Ofcom’s earlier proposal to impose maximum fixed contract periods.
Establishing whether or not a particular customer has no more than ten employees may be problematic for communications providers and a massive undertaking, especially where the communications provider is itself a relatively small business. In anticipation of such difficulties, Ofcom has said it will be flexible in relation to small businesses and has set out its approach in written guidance. In any event, in order to meet Ofcom’s timetable it is imperative that all your customer contracts now be reviewed and a plan be drawn up to allow for the migration of existing contracts onto new enforceable terms.
Martine Nathan
It is therefore imperative for fixed line and broadband service providers to start taking action now. These service providers will need to review their existing contracts and ensure that consumers and small businesses with no more than 10 employees are transferred on to alternative contracts prior to 31 December 2012. Fixed term contracts of a reasonable length are still permitted and service providers may elect to transfer their customers onto such contracts but should be aware of
While the downside to the ban is the additional administrative work that will inevitably be required, the upside is that it represents a significant sales opportunity. Millions of contracts are going to be ‘unlocked’ and customers will be able to actively choose their service provider, rather than staying with them by default.
Should you require any further information or advice on the new Ofcom rules, please contact Martine Nathan at Teacher Stern Solicitors on 020 7242 3191 or at
m.nathan@
teacherstern.com.
Comms Dealer Webinar in association with Gamma Telecom Get a grip on... choosing the right access service for IP Telephony
Comms Dealer is delighted to announce the forth in a series of educational seminars to help you secure new margin opportunities by offering managed services to your customer base.
Get a grip on... choosing the right access service for IP Telephony
Tuesday 25th October – 2pm Wednesday 26th October – 10am
Hosted by James Bushell, Head of Data Services, Gamma
This session looks at what you should consider when choosing a data services supplier for your IP Telephony customers.
We’ll look what makes a quality broadband supplier, as well as the different access technologies available on the market today, and how best to deploy them as a part of IP Telephony solution.
All you have to do to participate is to register your interest now via
www.gammatelecom.com/commsdealer
n
www.comms-dealer.com
COMMS DEALER OCTOBER 2011 43
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78