These long term contracts, which are known as Automatically Renewable Contracts (ARCs), automatically come in to effect if customers do not specifically opt out of them. Therefore, customers have had to been aware of the contracts and go to the effort of saying that they did not want them, otherwise they were automatically saddled with them and with all the restrictions that came with them. This included penalties for moving to another service provider.
According to OFCOM around 15% of UK residential customers have been automatically placed on such contracts, or around 1 in 7. The biggest and most used telecoms company which uses ARCs is in fact BT, although they are also used by BT Adept Telecom, Axis Telecom, Eze Talk and iTalk for residential customers, and TalkTalk Business, Titan Telecoms and Optimum Calls for business customers, to list just a few.
Announcing the move, the Chief Executive of OFCOM, Ed Richards, said: "ARCs raise barriers to effective competition by locking customers into long-term deals with little additional benefit."
Commenting on the announcement, David Clark, Director of DBS Telecoms, a leading supplier of 0800, 0845 and virtual local numbers, including London 020 numbers, said: “I am delighted to say that this move will not affect DBS, our telephone numbers or our customers, because we do not use such contracts. DBS takes great pride in being able to say to our customers that you will not be tied into any form of long term contract when you order with us. It certainly isn’t a case of you have to opt out of anything with DBS Telecoms, we simply do not believe in imposing long term contacts of any type. DBS Telecoms feels that if a telecoms company provides good numbers, good customer service, sensible prices and responds to the needs of its customers then it should not need to force customers to stay with them, because they will want to stay with them. If customers want to stay then they will stay, but if they are not happy, if they want to leave, or if their personal circumstances change then they shouldn’t be made to stay against their will. All we require when someone wishes to cancel their number is 30 days written confirmation. You can have a number with DBS for as much or as little time as you want.
“In one sense, I welcome this move, because it means that customers will have real choice as to who supplies their phone numbers without being forced to stay with companies and without fear of penalties for leaving”, said Mr Clarke, “but at the same time I think it’s a shame that OFCOM had to force companies to do this. They should have taken the same attitude as DBS and allowed customers to make their own choices. They should have had a bit more faith that their customers would stay with them without being forced, and if they were worried that customers would leave them unless they were locked in, then they should have improved their companies, their service and their support so that customers would want to stay without being forced. Still, at the end of the day I am glad that telecoms customers are going to be getting a better deal.”