Broadband exit fees and above-inflation price rises should be scrapped as UK customers face a cost of living crisis, the CEO and founder of broadband firm Cuckoo Alex Fitzgerald has demanded.
He said millions of internet users are seeing annual price rises of nearly 10 per cent just as other bills rocket – but are helpless to react because of exit penalties of hundreds of pounds.
With most broadband customers locked into 18-month or 24-month contracts, it has been reported that the price rises will cost UK households more than £100m a month – or £1.3bn a year.
This week alone, six of the eight major broadband providers – BT, EE, TalkTalk, Vodafone, Plusnet and John Lewis Broadband – are raising their prices for most customers by between 8.2 per cent and 9.3 per cent depending on when they initially signed up.
Yet unlike the energy sector, where wholesale prices have dramatically increased, wholesale costs in broadband are regulated by Ofcom and have remained flat for two decades.
As such, Fitzgerald has urged broadband providers to “do the decent thing” and scrap exit fees and above-inflation increases.
“Most broadband customers are tied into long contracts. Many won’t have read the small print properly and won’t realise they face an annual increase tied to the Consumer Prices Index with another four per cent whacked on top”, he said.
“Then when they do realise and try to leave for a better deal, they run into the brick wall of exit fees. These can be hundreds of pounds. Broadband firms use opaque methods to calculate the fees – meaning customers aren’t sure of how much they could have to fork out”.
For the Cuckoo founder, it is the combination of price rises and exit fee traps that makes the situation so unfair for the poorest and middle income households.
He said that whilst Cuckoo couldn’t promise that it would never raise its prices, he said the main focus was being honest and transparent whenever it did need to do so.
Having started out in 2020, Cuckoo defines itself as the “challenger broadband company”, with a mission of becoming the UK’s fastest and fairest internet service provider.
Investors include venture capital firms RTP Global and JamJar Investments, who have backed by the likes of Deliveroo and Oatly.