UK’s telecom regulator Ofcom has confirmed that rollover contracts, which tie landline and broadband customers into repeated minimum contract periods unless they opt out, will be banned from December 2011.
The contracts, also known as Automatically Renewable Contracts (ARCs), roll forward to a new minimum contract period – with penalties for leaving – unless the customer actively opts out of the renewal.
The ban will apply to ARCs for landline and broadband services sold to residential and small business customers.
Ofcom 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.
Ofcom has set out a timetable for the removal of rollover contracts from the telecoms market which takes account of systems changes that will need to be made by communications providers.
The sale of new automatically renewable contracts to residential and small business customers will be prohibited from 31 December 2011.
Communications providers are advised by Ofcom to move all residential and small business customers currently on rollover contracts to alternative deals, and to completely remove rollover contracts from the market by 31 December 2012.
