oFCoM Investigates mobile phone & broadband suppliers over pricing

Sarah

In January 2023, the Consumer Price Index (CPI) was 10.1%, representing the average prices have risen in the 12 months prior. Inflation rates have not been this high since 1981, as they have averaged at 2.71% since 1989. This time of economic uncertainty and hardship is having knock on effects across every aspect of peoples’ lives. Unexpected mid-contract broadband and mobile phone price rises are adding more pressure to household expenses. As many broadband providers use the CPI (or RPI) in order to determine the prices of their services, many customers have seen price rises of over 14%. BT, PlusNet and Vodafone have all confirmed price rises of 14.4%, with TalkTalk also confirming a 14.2% rise. Some customers could face even harder financial burdens, as O2 and Virgin are yet to announce prices, which could rise by 17-18%. In 2021, 88% of all adults in UK had a smartphone, so these rises will further squeeze almost every household’s bills.

Consumers not prepared to bear mid-contract price rises, could opt for services from Tesco Mobile, Hyperoptic, Utility Warehouse or Zen Internet, who have all promised not to raise prices during a minimum contract period. This could offer wellneeded peace of mind to 1/3 of users who aren’t clear if their phone bills are likely to rise.

The whole picture finds consumers between a rock and a hard place, as customers face exit bills of between £122.40 (TalkTalk) and £219.04 (BT). This means households must accept unexpected price rises or pay in order switch and attempt to escape the squeeze. OFCOM, the regulator for UK communications services including broadband, TV, radio and postal services, has launched an investigation into the mid-contract broadband price rises. It has been suggested that exit fees should be removed, in order to create a more flexible market for consumers.

OFCOM already has rules stating that telecoms providers must offer their customers the right to exit their contract penalty free if they surprise them with unexpected price rises. However, as many price hikes are part of consumer contracts, they do not qualify under these rules, giving customers no choice but to pay. For consumers looking to switch to a more affordable provider, it is essential to read the Terms and Conditions of the contract. There are widespread concerns about households’ ability to afford the higher bills. In 2021, 9.1 million households struggled to pay telecoms bills, and 17% have been forced to cut back on other spending such as food and clothing.

The unexpected price rises are therefore seen by many as unreasonable, as they build uncertainty and drain confidence from UK households, 36% (over 10 million) of whom are already facing significant financial hardship.