Broadband exit fees: what it costs to leave early

Broadband exit fees are the reason a lot of people stay with a provider they stopped liking a year ago. The fear is that leaving costs a fortune, the contract says something long and unreadable about it, and nobody wants to ring up and find out. In practice the number is usually smaller than the fear, it is capped by a rule most people have never heard of, and there are several situations where it comes to nothing at all. Here is how the charge is actually worked out, and what to check before you agree to pay one.

How are broadband exit fees worked out?

Almost every provider starts from the same sum: your monthly price multiplied by the number of months left on your minimum term. Then it comes down. VAT is taken out, because your provider never keeps that anyway, and so are the costs they stop carrying once they are no longer supplying you for the rest of the term.

That second deduction is the part people miss. A package at around £30 a month with ten months to run does not usually produce a £300 bill. It produces something below it. How far below is a matter for each provider, which is why the only figure worth anything to you is your own, in writing, with the workings shown.

The other thing that decides the size of the charge is timing, and it is entirely in your hands. Eighteen months into a two year deal, leaving is cheap. Two months in, it is not, and no amount of arguing changes the arithmetic.

What the rule actually says

Ofcom's position is short, and worth knowing before you phone anyone: an early termination charge should never leave you paying more than you would have paid by seeing the contract out, and it should usually be less than that, to reflect what the provider saves by not serving you.

That is a cap rather than a price. It does not make a charge small on a long contract you have barely started, and it does not give anyone a way out of a deal they have changed their mind about. What it rules out is the version people quietly fear, where leaving somehow costs more than staying. Ofcom's enforcement programme into early termination charges sets out the standard it holds providers to.

It is not a theoretical rule either. In 2018 Ofcom fined EE and Virgin Media £13.3m between them for charging people more to leave early than they had agreed to at sign-up, with around 400,000 EE customers over-billed. The background is on Ofcom's page covering its investigation into EE's early termination charges. The lesson for you is smaller than the headline: the figure a provider quotes is not automatically right, and asking how it was worked out is a perfectly ordinary thing to do.

When can you leave without paying an exit fee?

More often than people assume. These are the situations where the charge should not apply at all.

• You are still in the cooling-off period. Sign up online or over the phone and you normally get 14 days to change your mind, whatever minimum term you agreed to.
• Your minimum term has already finished. The charge disappears with it, which is why the weeks around your contract ending are the cheapest time to move. What happens when your deal ends covers what changes and when.
• A price rise landed that your contract did not spell out. Where that happens you are generally given a window, commonly 30 days from being told, to leave without penalty. Our guide to what a provider can do to your price goes through which rises count.
• Your speed has stayed below the minimum you were guaranteed. Providers signed up to the speed codes have to be given a chance to fix it first, and a right to exit follows if they cannot. Working out whether it is your wifi or your line matters here, because the right only applies to the line.

One that is not on the list, and that people expect to be: moving somewhere your provider cannot reach. That does not automatically hand you a free exit, and what happens to your contract when you move explains where you really stand.

The charge nobody budgets for

The exit fee is rarely the only line on a final bill. Where your provider lent you a router or other kit, most want it back within a set window once the service stops, and bill you for it if it does not turn up or comes back damaged.

That is an easy few tens of pounds to lose to a box left in a cupboard. Ask on the day you cancel what has to go back, how long you have, and who pays the postage. Then keep the proof of postage until the final bill has cleared. It is the sort of small admin nobody enjoys, and it is cheaper than the alternative.

Does One Touch Switch cancel the fee?

No, and it was never meant to. Switching provider is a cancellation as far as your old contract is concerned, so the charge applies exactly as it would if you were simply walking away.

What the process does do is make sure you see the number first. When your new provider starts the switch, your existing one has to send you the switching information, setting out any early termination charge and any equipment you owe, before you confirm anything. That is the safeguard worth using: read it, check it against the sums above, and query it then rather than after the money has gone. How switching actually works covers the rest of the process end to end.

When paying to leave is the cheaper move

Sometimes the fee is worth paying, and the arithmetic is simple enough to do on the back of an envelope. Take the charge you have been quoted, add any setup cost on the new deal, and set that against the monthly saving multiplied by the months you would have left. If the saving clears the cost with room to spare, staying put is the expensive option.

Be honest about the second half of that sum, though. A cheap new deal that rises every spring is not the same as a cheap new deal, and the comparison only works if you use what the whole term costs rather than the headline price. Several of the networks we track hold the price for the full term instead of raising it each year, which makes the maths a good deal easier to trust.

The honest caveat is coverage. These are regional builds rather than national ones, so whether any of it reaches you is decided by your own address and nothing else. Our availability checker is the shortest way to find out what is actually there.

What to do before you cancel

• Get the figure in writing. A number said on the phone is not something you can check or dispute later.
• Ask how it was calculated. Specifically, what has been taken off for VAT and for the costs they no longer carry.
• Find your contract end date. If it is a couple of months away, waiting is almost always cheaper than arguing.
• Check whether a free exit already applies. A price rise or a persistent speed problem may have opened a window you did not notice.
• Count the equipment. Ask what has to go back and by when, before you cancel rather than after.

None of this makes an exit fee pleasant. It does make it a known number rather than a threat, which is the difference between choosing to stay and feeling stuck. If what you want next is the freedom never to have this conversation again, rolling monthly broadband is the trade worth understanding: a higher price every month, and nothing to pay whenever you decide to go.

Frequently asked questions

How much is a typical broadband exit fee?

There is no standard figure, because it is worked out from your own package and how long you have left rather than from a price list. The sum almost every provider starts with is your monthly price multiplied by the months remaining, then reduced to take out VAT and the costs they no longer carry. A deal near the end of its term can cost very little to leave. One you signed a month ago can cost a great deal, and no rule makes that unfair.

Can my provider charge me the full remaining balance?

It should not, and Ofcom has been explicit about it: the charge must never come to more than you would have paid by staying, and it should usually be less to reflect what the provider saves. A quote that is exactly your monthly price times the months left, with nothing taken off, is worth querying in writing before you pay it. Ask them to show you how the figure was calculated.

Do I still pay an exit fee if I am switching to another provider?

Yes. Switching and cancelling are the same thing as far as your old contract is concerned, so leaving mid-term for a better deal elsewhere triggers the charge exactly as walking away would. The switching process does make sure the figure reaches you before you commit, which is the part that used to catch people out.

Will I be charged for the router as well?

Sometimes, and it is billed separately from the exit fee. Providers that lend you equipment usually want it back within a set window after the service ends, and charge for it if it does not arrive or comes back damaged. Read the final bill line by line rather than assuming one number covers everything, and keep the proof of postage.

Can you negotiate an exit fee down?

Occasionally, and it costs a phone call to find out. Where a provider has got something wrong, a long fault or a service that never worked properly, there is real room to argue. Where you have simply found a cheaper deal, there is much less, though a retentions team would often rather cut your monthly price than lose you. If the disagreement is genuine and you get nowhere, the free complaints scheme your provider belongs to is the next step.