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MONEY

How Germany has made it easier to cancel broadband and phone contracts

Automatically extending contracts have been the bane of people's existence in Germany for many years - and have often led to customers being locked in for years if they don't cancel in time. All of that changes on December 1st. Here's what you need to know.

A woman sends a message on her mobile phone
A woman sends a message on her mobile phone. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

What’s going on?

On December 1st, new amendments to the Telecommunications Act came into force in Germany. The updates bring with them wide-ranging changes to consumer rights laws for people who’ve signed – or will sign – new mobile, landline and internet contracts.

The headline change relates to the amount of time contracts are allowed to run for after they renew. If a customer signs up to a 24-month mobile contract and doesn’t cancel before it renews, telecommunications companies will no longer be allowed to sign that customer up for another one or two years without their permission.

Instead, people who don’t cancel in time will be put onto a one-month rolling contract that essentially allows them to terminate at any point with just one month’s notice.

It’s an end to a tax on the disorganised that has seen people stuck paying for contracts they no longer want or need for up to 24 months longer – often at higher prices than they agreed when they first signed the contract.

Does that mean all contracts will be rolling contracts?

Not exactly. As before, most new contracts will run for a minimum 24-month term – so expect to be locked in for at least this long, unless you specifically look for a more flexible contract. 

The change affects what happens after this initial term is up, meaning if you do sign up for a yearly contract, one year won’t automatically turn into two if you don’t remember to cancel it in time. 

READ ALSO: Everything that changes in Germany in December 2021

What else is new?

Alongside the key changes to contract durations, there are also changes to the way in which contracts are agreed and tougher standards for internet providers.

In future, if you agree a contract over the phone, you have to receive a summary of the terms of the contract and confirm it in writing before the agreement is legally valid. 

This summary must include the service provider’s contact details, a description of agreed services, details of any activation fees, the duration of the contract and any conditions for renewal and termination. Without written approval, the contract has no legal standing and the provider has no claims against the customer – even if they switched to the new services immediately after the telephone call.

A young man on the phone in Hannover
A young man takes a phone call on a tram in Hannover. Under the new changes, contracts agreed over the phone will not be valid until they are confirmed in writing. Photo: picture alliance/dpa | Hauke-Christian Dittrich

If a provider makes a change to a contract after it’s up and running, customers now have the right to terminate without notice.

In future, providers must inform customers if there are more favourable offers available and a change to a new contract would be possible.  This must happen once a year, and once again, providers aren’t allowed to do this solely over the phone. 

For broadband customers, there’s more good news: internet providers will in future face issues if they don’t provide the bandwidth stated in the contract. 

That means that if your internet is slower than promised, you should have the right to pay a reduced price or terminate the contract. 

READ ALSO: Moving house in Germany: 7 things you need to know about setting up utility contracts

I signed a new contract a while ago. Do the new rules still apply? 

Yes, they do. Regardless of when you signed your new contract, the amendments to the Telecommunications Act will apply. 

That means that once your initial contract period is up, you should be able to cancel freely and only pay for the month’s notice. You should also be informed of any changes to your contract or better offers and be eligible for compensation if your internet goes below the promised bandwidth. 

If you’ve already been locked in to a 12- or 24-month contract through an auto-renewal, the situation is a bit less clear – but it may be worth contacting your provider and asking them if the terms of your contract have changed in light of the new law. 

READ ALSO: Has it just got easier to end credit agreements in Germany?

What are people saying?

The Telecommunications and Value-Added Services Association, which represents the industry, said it was important than the initial 24-month contracts were allowed to continue. The subsequent new notice periods are a good compromise, VATM Managing Director Jürgen Grützner told Tagesschau

“On the one hand, this means better financial forecasting for expanding providers’ networks and, on the other hand, the best of both worlds for consumers,” he added. 

Campaign for faster internet
“We need fast internet!” is scrawled in huge letters across a street in Weetzen, Lower Saxony. Photo: picture alliance/dpa | Ole Spata

However, Grützner believes the new rules on bandwidth could cause difficulties for providers who struggle to offer the same quality of internet across all regions. 

Meanwhile, consumer rights advocates have welcomed the improvements to contract law. 

In particular, the Federal Consumer Advice Centre “expects competition to improve as a result of the new regulation, including the price-performance ratio,” Susanne Blohm from the organisation’s Digital and Media Division told Tagesschau.

In an initial sign of the regulation’s positive impact, the provider Telefonica has announced that it will abolish surcharges for contracts that don’t have a minimum cancellation period. 

Vocabulary

amendments – (die) Novelle

bandwidth – (die) Bandbreite 

minimum contract term – (die) Mindestlaufzeit 

provider – (der) Anbieter

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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MONEY

Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.

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