Three resists watchdog's call for 'fairer' mobile phone fees

The UK's telecom regulator has said Three is the only major UK mobile network to have "refused" to automatically cut its customers' monthly charge at the end of their contract's lock-in period.

As a result, Ofcom said, the firm's subscribers would "overpay" unless they took action to change to another deal.

The watchdog said it had challenged the industry to treat users more fairly.

But Three said that an automatic fee change could backfire.

"We do not believe Ofcom's proposal will encourage engagement amongst consumers," said a spokesman for the Maidenhead, Berkshire-based network.

"Instead, it risks creating a stagnant market whereby consumers are not encouraged to shop around for the best deal at the end of their minimum term."

By contrast, Ofcom said that the other major mobile companies had given it the following commitments regarding out-of-contract customers:

• O2 and Virgin Mobile - will cut the monthly charge to the equivalent of a 30-day Sim-only deal

• Vodafone and EE - will automatically reduce prices three months after the subscribers' lock-in period expires, but have yet to say by what amount

• Tesco Mobile - will reduce the monthly charge to the best available airtime tariff

In all cases, changes to monthly bills will only be made if they result in a lower charge. This addresses a concern that some customers might actually face higher fees by being switched to a Sim-only deal.

The pledges are set to come into effect by February 2020.

The regulator said it hoped the moves would help address a situation in which the industry was overcharging the public by a total of about £182m.

According to Ofcom's estimates, 1.4 million out-of-contract mobile phone users are currently spending an average of nearly £11 more per month than they would if they had been switched to a comparable Sim-only deal.

This situation had arisen, it explained, because initial deals typically covered both the cost of a handset and its usage.

"We're introducing a range of measures to increase fairness for mobile customers, while ensuring we don't leave existing customers worse off," said Ofcom's consumer group director, Lindsey Fussell, in a statement.

"All the major mobile companies - except Three - will also be reducing bills for millions of customers who are past their initial contract period."

The charity network Citizens Advice - which has long campaigned against what it has described as being a "loyalty penalty" - welcomed the development.

"Most mobile phone providers have now realised the game is up," said it chief executive Gillian Guy.

"Three needs to step up and if it doesn't, then stronger action is needed to make these changes compulsory. If Ofcom is unable to do this, then government needs to intervene."

Split contracts

Ofcom's announcement follows an earlier decision to force mobile phone operators - among others - to text, email or send a letter to alert subscribers when their contracts are about to expire and to inform them of alternative deals.

In addition, the watchdog has said it plans to make companies tell customers what it would cost to buy a phone and its airtime separately, to help them judge whether a bundle truly offers better value.

It has also proposed a new rule that would prevent firms offering split contracts - in which fees for the phone and airtime are separated - where the handset element lasts longer than 24 months.