Nearly 13 million mobile and broadband customers to be hit by inflation-busting 4.5% mid-contract price rises next week - but will be penalised if they leave[1]
Mid-term price rises should mean you are free to quit your deal[2], but increases are now included in customers’ contracts and communicated at the point of sale, to get around Ofcom rules
Mobile and broadband companies including BT, EE and Vodafone now hike bills every year by the rate of inflation (CPI) plus 3.9%
More than two fifths of (43%) mobile and almost one in ten (9%) broadband customers now face bill increases they cannot escape from[3]
Other sectors such as energy and insurance do not raise prices in the middle of a fixed contract
Uswitch.com calls on Ofcom to act to make sure customers have a get-out clause to avoid mid-contract price rises so consumers can have certainty of the price they will pay.
Almost 13 million mobile phone and broadband customers will next week see their bills rise in the middle of their contract by 4.5%[1], reveals research by Uswitch.com, the comparison and switching service.
The mid-contract price rise will cost consumers an extra £11 million a month, but none of them will be able to walk away from these increases without paying a penalty[2].
Ofcom rules say that customers must be given one month’s notice of any rise in the monthly fee, and allowed to exit the contract without penalty[2]. However, telecoms companies use a loophole in this rule by writing yearly increases into contracts and communicating it to customers when they sign up.
BT, EE and Vodafone now increase their prices every year for most customers by the rate of inflation (CPI) plus 3.9%, while others, such as O2 increase prices by the rate of inflation (RPI) and Three by a flat 4.5%. Since this increase is written in their contracts, more than two fifths of mobile (43%) and almost one in ten (9%) broadband customers are unable to leave penalty-free{3}.
Table: Broadband price rises
Provider | Price rise | Takes effect | Can you cancel penalty free? |
---|---|---|---|
BT | Up to 4.5% | 31st March | No |
Plusnet | Up to 4.5% | 1st June | No |
Sky | Capped at £6 a month | 1st April | Yes |
TalkTalk | Up to £36 per year | 1st April | Yes |
Virgin Media | Up to £54 per year | 1st March | Yes |
Table: Mobile price rises
Provider | Price rise | Takes effect | Can you cancel penalty free? |
---|---|---|---|
BT | Up to 4.5% | 31st March | No |
EE | Up to 4.5% | 31st March | No |
O2 | 1.4% | April bill | No |
Three | Up to 4.5% | April bill | No |
Vodofone | Up to 4.5% | April bill | No |
Source: Uswitch.com, data correct as at 23/3/21
Inflation is currently low, with the December’s figure (CPI) used to calculate most of the spring price rises standing at 0.6%. However, if inflation rose to 3% — as it did as recently as 2018 — it would mean bills increasing by a massive 6.9%, equal to £16 extra a year for someone on a £20-a-month contract[4].
Uswitch.com experts question the need for mid-contract price rises, as there are none in the fixed tariffs offered by the energy and insurance markets. And while customers once had a choice to switch to providers that didn’t impose such increases, in recent years the main players in the market have all brought in similar policies.
Uswitch.com is calling for the industry watchdog Ofcom to act to give consumers the option of exiting their contract without penalty and avoid any price rises, establishing the principle that a fixed length contract comes with a fixed price.
Richard Neudegg, head of regulation at Uswitch.com, comments: “Millions of mobile phone and broadband customers are being hit by mid-contract price rises of 4.5% at a time when inflation is below 1%.
“Ofcom’s rules were supposed to allow consumers to leave their deal penalty-free if their bills go up, but providers have got around this by writing these increases into customers’ deals.
“Given the majority of telecoms providers are now using this tactic to prevent their customers from freely walking away from their contracts when prices go up, consumers have little choice but to accept this practice, taking a gamble on where future inflation rates will land. Now is the moment the regulator needs to step in and stamp out this loophole.
“What’s frustrating for customers is that in other sectors, such as energy and insurance, the price you sign up for doesn't increase until the deal ends - it’s a case of fixed price as well as fixed term. There really is no special case for this to be different in telecoms.”
Find out how much you could save a year with Uswitch.com here.
Uswitch is one of the UK’s top comparison websites for home services switching, including broadband, mobiles, SIM Only and insurance. We’ve saved consumers over £2.5 billion off their bills since we launched in September 2000.
In 2022, Uswitch launched its free mobile app, Utrack, to help consumers manage their home energy costs. By connecting to their smart meter, users can track their energy usage hourly, get dynamic insights and calculate potential savings with handy tips.
Uswitch is part of RVU, a global group of online brands with a mission to empower consumers to make more confident home services, insurance and financial decisions.