Procurement 5 June 2017

What every small business owner needs to know about telecoms contracts

worst broadband providers
Ofcom has ruled you can opt out of telecoms contracts if prices rise
Telecoms are essential for every business, but it’s easy to get bamboozled by the jargon. Here, head of telecoms consultancy Equinox, Dave Millett, gives some key points to consider when negotiating business telecoms contracts.

Last year, Ofcom research showed that 34 per cent of small UK business owners believed they don’t have the confidence to identify telecoms products and services that could benefit their organisation. Contracts often include complicated charging structures, meaning you may sign something you later come to regret.

Whether you are in-contact already or just about to negotiate a new one, here are some key considerations.

Proof of contract dates

Just because a supplier’s system says your contract ends on a certain date does not necessarily mean it does. Data entry errors are possible, or there could be deliberate attempts to mislead consumers.

The onus is always on the supplier to prove the contract end dates. Reasonable proof is a copy of the original signed document, e-contract, or even a recorded phone call.

Contract renewal or cancellation

The regulator Ofcom has rules protecting consumers and businesses with ten employees or fewer. Ofcom protection bans automatic rollover of contracts, and gives the customer the ability to cancel contracts because of price rises or failure to deliver promised broadband speeds.

Unfortunately, some suppliers try to work around these protections. Automatic rollovers are an example. Contracts may say tick this box to keep tariffs after the contract end date. They don’t make it clear that by ticking, you are agreeing to an automatic renewal. Ticking the box can mean waiving away your rights!

Ofcom has ruled that you can opt out of a contract if the prices rise as long as you give notice within 30 days of notification of the rise.

However, suppliers may publish revised prices on their websites only or may tuck them away in the small print on invoices. If you miss the notification, you miss the opportunity to cancel your contract. Beware.

Notice period and penalties

Notice periods can vary greatly, they can be anything from thirty days to six months, with three years being the longest weve seen.

Check the penalties for early contract cancellation. If the company gave free installation in return for a three-year contract, and you cancel much sooner, it is reasonable for you to be asked to pay for the installation.

However, weve seen an example where initially a penalty was stated as 42, 000. It took two years of arguing before the supplier agreed to 5, 000. Small businesses are protected by Ofcom rules on the calculation of penalties, so make sure you know your rights and avoid overpaying.

Other tricks to look out for

  • False inducements, such as: We promise your business will save money with us, however the savings arent delivered
  • If you change or add a service your contract is restarted automatically
  • Adding new services that have individual contracts so that end dates are different. As youll never be out of contract on all your services at the same time cancellation is almost impossible
  • Give a different timescale to each element within the contract. For example, phone calls for twenty-four months and line rental for five years

How can you reduce risk and protect your business?

Make sure your supplier is signed up to the telecoms ombudsman. When there are disputes, the Ombudsman offers free binding arbitration to consumers and small businesses. You must give the communications company a reasonable opportunity to resolve your complaint. If you have serious concerns talk to a lawyer.


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