Mobile customers will have right to set cap on monthly fees

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In particular, this clause is intended to stop providers from hitting customers with expensive "overage" or "out of plan" fees, which charge mobile users for exceeding monthly allowances set by their contracts.

Added to this, providers will be obliged to provide advance warning if a billing limit is about to be passed, and to "notify the customer as soon as practicable if a limit is reached before the end of the [billing] period".

However, as good as it may be for customers to have protection against unexpected charges, it's possible that imposing limits on out of plan fees may cause normal fees to rise in parallel.

Examples

That said, what the Act proposes isn't a massively drastic departure from what some mobile operators are already doing, differing mostly in terms of making the ability to set limits mandatory for all providers.

For example, Plusnet Mobile, BT Mobile, Three UK and Tesco Mobile all offer customers the option of setting monthly limits on extra spending.

In Plusnet's case, users are automatically entered into their Smart Cap system, which limits out of plan spending to £10, and can be reduced to a minimum of £2 and increased to a maximum of £30.

Of course, with the Digital Economy Bill's Royal Assent, every mobile operator in the UK will soon be forced to do much the same.

The Act's clause 124S states the following:

The provider of a mobile phone service must not enter into a contract to provide the service unless the customer has been given an opportunity to specify a billing limit in the contract.

In other words, operators will have to provide a facility for customers to set an out of plan spending cap, and will most likely have to inform customers about this facility and invite them to use it.

Such a requirement seems to have been met positively by most operators, with Vodafone telling us, "We already alert our customers when they are close to the limit of their allowance ... But we are very happy to work with the Government on any further measures to ensure our customers can use our products worry free".

Compensation?

Yet what's most interesting about the Act isn't just its requirement for all providers to allow customers to set a cap.

It also states that, if "the provider continues to provide the service after a limit is reached", the customer's continued use of the service does not permit the provider to charge above the monthly ceiling.

This could end up being significant, since it essentially allows customers to use a service without paying for it, thereby raising the possibility that operators will incur network costs without being able to recoup them in out of plan fees.

In turn, this may eventually result in higher normal charges for all customers, so as to compensate for what was lost in extra charges.

Something vaguely similar to this happened in early 2016, when Three began offering free mobile data to new pay as you go customers while increasing costs for customers on older monthly contracts.

Inconvenience?

However, it's unlikely that providers will make the mistake of providing a service they don't charge for. Instead, they'll probably begin taking extra care to ensure they halt a customer's service once he or she has reached the monthly cap.

This itself could be something of an inconvenience to customers, since in particular situations and emergencies they may need to make a call after having reached their out of plan limit.

But as the Act makes clear, they won't be obliged to set a cap for themselves. It will simply be an option, one which providers are now required by law to offer them.

And because it makes this option necessary, the Act is a good thing for mobile phone customers, or at least those customers who would otherwise be likely to find themselves being hit by steep fees at the end of each month.