Mobile operator O2 is heading for a showdown with Ofcom over the regulator’s plan to ban three-year phone contracts.
The media watchdog insists the contracts trap customers into excessively long deals, preventing them from switching mobile providers if they are not happy.
But O2 says there is no evidence for Ofcom’s claims and that the proposals will reduce consumer choice and lead to price rises.
O2 is heading for a showdown with Ofcom over the regulator’s plan to ban three-year phone contracts (stock image)
The proposed ban would affect deals offered by mobile companies that currently allow consumers to pay some of a phone’s cost up front and then spread the rest in instalments over a longer period.
For example, Apple’s new iPhone 11 sells from £729 if bought directly.
But under one of O2’s contract deals, a customer can instead pay £30 up front and then pay for the rest of the device’s cost, plus a sum for services such as calls and data, in monthly instalments of £45.55 over three years.
The watchdog insists the contracts trap customers into excessively long deals but O2 says there is no evidence for Ofcom’s claims (stock image)
The regulator wants to bring in changes from next spring that would ban three-year contracts and instead set a maximum time limit so that customers could be locked in for no longer than two years.
Its consultation ended on September 16 and Ofcom has said it will confirm whether it plans to press ahead before the end of this year.
It is understood that the company, which has 25million customers, has considered taking legal action against Ofcom if the regulator tries to force it to comply.