What to check before signing a telecoms contract

By: Dave Millett

Date: 6 July 2017

What to check before signing a telecoms contractWhatever industry your business is in, you're going to need telecoms. But signing a contract today might leave you kicking yourself in the future if the contract doesn't allow for the growth and development of your business. Here are some tips on what to look out for:

Supplier signed up with the Ombudsman? Make sure your supplier is signed up to the telecoms Ombudsman Services. When there are disputes the Ombudsman offers free binding arbitration to consumers and small businesses.

Notice period. Beware the lengthy notice period. The longest we've seen is three years. They are more usually between 30 days and six months. Does the notice period suit you?

Penalties. How severe are the penalties if you cancel before the end of the contract term? Some are reasonable – for instance if you got free installation as part of a three-year deal and you cancel after one year you may have to pay for the installation costs. Ofcom rules protect small businesses with ten employees or fewer and these include penalty calculations. Be aware of your current rights and avoid excessive penalties.

Same term for all services. Some suppliers try giving each element of a contract a different term. For example line rental for five years and telephone calls for one year. This can trap you into a longer relationship than you might want. Similarly look out for terms in the contract which state what happens if you add a service. Can you align the dates so that all aspects of your contract end at the same time? If not this can make cancellation almost impossible as you'll never be out of contract on all your services simultaneously.

Contract renewal. Watch for attempts to get you to sign up for automatic rollovers. Contracts may say "tick this box to keep tariffs after contract end date". They don't make clear that by ticking you are agreeing to an automatic renewal. Rather than waiving your rights, you may prefer not to tick the box. Another ploy we've seen is a clause in the contract which says that if you change or add a service will this automatically restart your contract.

Notification of changes to T&Cs. Ofcom rules say you can opt out of a contract if the price rises – as long as you give notice within 30 days of notification of the increase. If you miss the notification, you miss the opportunity to cancel your contract. Check the contract and be very clear on how the notification will be made. If it will be on the supplier's website only you'll need to diarise a regular check.

Do the maths. We're often lured into contracts with the promise that our business will save money by switching supplier. Make sure you double-check the contract so that you can be confident the savings will materialise.

Protect your business. You may want to send an email that spells out your understanding of the contract. Ask the supplier to confirm in writing that in a conflict between their T&Cs and the email, then the email takes precedence and only on that basis are you accepting contract.

Sponsored post. Copyright © 2017 Dave Millett, independent telecoms brokerage Equinox.