Photo: Ofcom

Anyone who has ever signed a long-term contract with landline or broadband providers knows the feeling of seeing a better deal come by that you cannot take up because you’re locked into a torrid contract with very high early termination fees. That’s about to change, with Ofcom pressuring TalkTalk, BT and Virgin to slash the price of their contract termination fees.

What is a contract termination fee?

A contract termination fee is the amount of money one is still liable to pay for every month left on a contract they’ve recently cancelled. The termination fee is less than the monthly subscription fee, but is often still very high. Ofcom has pressured the major UK broadband providers to reduce this cost, so as to ‘reflect the costs that the providers save by no longer providing the service’ to you.

New pricing

Photo: TalkTalk

In some instances, TalkTalk, BT and Virgin would be reducing the cost of contract termination fees by as much as 85 per cent.

TalkTalk is first out the gate with termination fees revision, which previously ranged from £14.44 to £33.48, to between £3.00 and £8.00. The termination fee is relative to the package that you are on, and this pricing model kicked in on 1 June 2010.

Virgin Media and BT will follow suit from 1 October 2010. With respect to Virgin Media contract cancellations, while charges currently range from £11.99 to £25.99 they will be reduced to £4.00 to £9.00. BT’s contract termination fee sits at £11.54 to £16.53 for every month left on your contract. Come 1 October, that will range between £2.00 and £5.00.

Photo: Virgin

Ofcom has said that they will pressure (and potentially fine) smaller broadband providers to follow suit in slashing these fees.

You can read Ofcom’s full report and pricing revisions here, in case you’re currently trying to escape a contract you’re unhappy with.

Good on ya, Ofcom.