Quiet refunds for some Plusnet customers

Credit: chrisdorney/Shutterstock.com

Customers have commented on receiving cheques ranging from £50 to £88, or not being charged for their broadband in recent bills as a result.

It looks as if the refunds are a result of a couple of factors, including the reorganisation of the UK's broadband exchanges last summer, and new price control measures from Ofcom.

Market conditions

Plusnet have always made use of geographic pricing, as we explained in this 2009 article, with customers in different areas paying different prices.

The refunds come as a result of changes made this time last year regarding how those areas are defined, following a review and consultation by Ofcom.

Anyone with time to spare or problems sleeping can read the final report into their findings here [pdf].

But in summary, the regulator found there had been enough changes in the market since their last review, in 2010, that their definitions needed redefining.

Areas where there were at least three of the big four broadband providers plus Vodafone "present or expected to be present", were classified as Market B. Broadly this took in the whole of what had previously been known as Markets 2 and 3.

The remaining exchanges, where there was just BT, or BT plus one of the other big four at the most, were classified as Market A.

This replaced Market 1, which historically covered the least competitive areas in the UK.

The change also reflected that there's been serious growth in the past few years: in 2010, 77.6% of the UK's premises would have counted as Market B; by last year however, that had increased to 89.8% of UK premises.

While a few exchanges were downgraded from Market B to Market A, a significant number were reassigned to reflect how much more competitive they had become.

This accounts for one group of people who appear to be eligible for refunds - those on exchanges that in 2010 were considered Market 1 but in 2014 were reclassified as Market B.

Take, for example, these comments from the Plusnet community forum:

davidj60
Reply #12 on 08/06/2015, 17:14
As intimated by others, I, too, received a cheque today. HOWEVER, everywhere that I look, my exchange is still listed as Market1 (A) - altho' it is unbundled by both Sky and TT !!!
I'll bank the cheque but be prepared for another missive in a few months time, telling me I OWE ~ £100s!!!

Mav
Reply #13 on 08/06/2015, 18:17
I wouldn't worry about your market being listed as 1 still as mine is, too. We also have Sky and TT.

Price ceilings

Meanwhile, as Plusnet themselves have explained to some of the other customers they've refunded:

"In June 2014, our regulator made changes to the broadband market. This meant that the price we were charged for providing broadband in your area reduced. Our pricing policy means that we should have lowered the price we were charging you. So, to set this right, we're refunding you the difference, plus interest"

As Plusnet resell BT's services their prices rely to a degree on what they themselves are charged by BT.

One of the outcomes of the review was a charge control for Market A, "in order to restrict BT's ability to charge excessive prices" to their resellers, which Ofcom say would most likely be passed on to customers.

At about the same time, new Ofcom rules regarding how much Openreach could charge for wholesale line rental came into effect - following three months where there was no price ceiling.

During those three months, the price for resellers rose from £93.32 to £96.17 per customer per year - but when the new controls came in, they dropped to £86.11 a year.

It seems likely that a combination of the two accounts for the refunds other customers are getting.

In any case, it's a nice gesture from the company that pride themselves on being customer service superheroes - even if some users are frustrated by their day to day experiences with them.