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Potential cost of ending a broadband contract early

Last Edit: 23/07/19

In the UK, there are a wide range of Internet Service Providers to choose from -- some providing niche community connection services in rural and urban areas -- but the majority of UK broadband subscribers are a customer of one of the major ISPs: BT, Virgin Media, BSkyB, Plusnet, EE, TalkTalk and Vodafone. These large ISPs usually provide customers with two subscriptions options:

1. Fixed term contract (9, 12, 18 or 24 months)
2. 30 day rolling contracts

The 30 day rolling contract typically only requires a customer to give 30 days’ notice that they want to cancel their contract and move to another provider; 30 day rolling contracts are ideal for customers who rent a property or work away from home for long periods. The benefit of a fixed term contract is that the price is usually set at a standard price for every month of the contract period, and is usually cheaper per month than the 30 day rolling contract. The downside of a fixed term contract is if a customer wants to cancel the contract early. Unlike the 30 day rolling contracts, there is typically a fixed penalty charge for ending a fixed term contract early.

The charge for ending a fixed term contract term early differs for each ISP and will typically differ for each broadband package that the ISP provides; as outlined by Virgin Media: "Early Disconnection Fees vary between customers as the calculation of how much is charged depends on the services that you have, how much you pay for those services, and how much of your minimum period remains for each service." Virgin Media give an example to show how much ending a fixed term contract can cost -- with four/five months left on the contract -- £57.34 x 4 months = £229.36 (Full House TV, VIVID 100 fibre broadband and Talk Weekends EDF). It should be noted that the early disconnection fee would be lower if it only included broadband.

BT currently has the following monthly 'Early Disconnection Fee' for the following packages: Broadband 15GB: £12.75; Broadband Unlimited: £17.00; Superfast Fibre Essential 30GB: £7.50; Superfast Fibre Unlimited: £16.00; Superfast Fibre 2 Unlimited: £25.00; Superfast Fibre Plus: £28.75; Ultrafast Fibre Plus: £23.50; and Ultrafast Fibre 2 Plus: £12.75. Therefore, if a Superfast Fibre Plus was canceled with four/five months of the contract left (30' days notice given) it would be £28.75 x 4 months = £115. Lower than Virgin Media's example because the Virgin Media example included 'Full House TV'.

What happens if I cancel part way through a month? Again, the policy differs for each ISP, some may charge you the full months fee, but BT currently state they will charge that month on a daily basis: if the total monthly charge was £12.00, the daily charge would be £0.40, and if there was 14 days left in the month, the charge for that month would be £0.40 x 14 = £5.60.

Do ISPs cap the disconnection fee they charge? Virgin Media currently state that they "cap the amount of the Early Disconnection Fee so that you will pay no more than £240". This appears to apply to every Virgin Media broadband fixed contract, but this cannot be taken for granted; contact Virgin Media if you are unsure. (source: https://www.virginmedia.com/shop/the-legal-stuff/terms-and-conditions-for-fibre-optic-services/early-disconnection-fees-to190429). I cannot find whether BT cap their Early Disconnection Fee (source: https://www.bt.com/assets/pdf/BT_PhoneTariff_Residential.pdf) in their 'Consumer Price Guide' literature, so it is probable that some ISPs do not cap their disconnection fees

What happens to the equipment I received when signing my contract? BT state that "You may also have to pay a charge for any equipment we have provided at a reduced cost for use with the service you are ending" and Virgin Media state "When you take out Virgin Media TV, Broadband and Phone services, the kit we provide is included as part of your services. This means that if you disconnect or change your Virgin Media services we may ask you to return your kit." (source: https://www.bt.com/assets/pdf/BT_PhoneTariff_Residential.pdf) and (source: https://www.virginmedia.com/help/virgin-media-how-to-cancel).

In conclusion: the article was created to highlight how canceling a fixed term contract for broadband can become very expensive if there is many months left on the contract (such as 16 months left on a 24 contract). Some providers do appear to cap the total cancellation fee (Virgin Media) while others appear not to. What should also be noted, however, is that early termination charges for a fixed rate broadband contract varies according to: when the package was taken; the type of package taken; and the provider the package was taken with.