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Inflation Frustration: Consumers must be allowed to walk away from broadband and mobile contracts set to soar by up to 11%

  • More than 19 million consumers will see their mobile bills rise mid-contract this spring[1], with inflation-busting increases potentially hitting 11%[2] 

  • On top of this, ten million homes[1] will see an average of £39 a year added to their broadband bill[3] 

  • Over half of consumers (56%) aren’t aware their deal includes a mid-contract price rise[4], and two in five (39%) consider the practice unfair[5]  

  • With only 9% of consumers able to correctly cite the current CPI rate[6] and just 1% knowing the RPI[7] they cannot be expected to predict the future impact of inflation on their bills when they first sign up to a deal, says Uswitch 

  • Uswitch.com calls on providers to let customers leave their contract penalty-free when price hikes are excessive -  and Ofcom to tighten the rules. 

Consumers must be allowed to walk away penalty-free from broadband and mobile contracts hit by unprecedented mid-contract rises of up to 11%[2], says Uswitch.com, the comparison and switching service.

More than 19 million mobile users and ten million households with broadband are set to be affected by mid-contract increases this spring[1] that could add more than £900 million a year to the nation’s bills[9]. The increases will add £39 a year to the average broadband bill and £28 a year to mobile costs[3].

While providers must permit customers to leave penalty-free in light of unexpected mid-contract price rises, the majority of increases this spring will not be covered, as most contracts contain a rule allowing inflation-based price changes. 

And new Uswitch research reveals millions of Brits are sleepwalking into these price rises due to a lack of understanding about inflation and what it will mean for them when they take out a deal.  

Only one in a hundred consumers questioned could give the current 7.5% rate for the Retail Price Index (RPI)[7], the inflationary measure O2 uses to calculate its mid-contract rise. The provider plans to add 3.9% to January’s RPI figure, which if unchanged, will mean an increase of 11.4%[2].  

Less than one in ten consumers (9%) can accurately cite the latest Consumer Price Index (CPI) inflation rate of 5.4%[6], which BT has used to calculate its planned broadband price increase of 9.3% — more than double last year’s figure of 4.5%. 

Overall, 95% of Brits believe that the inflation rate for the RPI is lower than it actually is, with 70% underestimating the CPI rate[8]. More than half of consumers (56%) are unaware these mid-contract increases exist[4].

The research also found that two in five people (39%) feel the mid-contract rises are unfair[5], with one in ten (10%) saying they would not have taken out their current deal had they known the provider was going to increase their bill[10]. 

With BT, Virgin Media O2, Vodafone, and Three UK all due to increase their tariffs in April, one in six people (16%) said these additional bill increases would put them in a difficult financial position[11].

In light of these unprecedented mid-contract price rises, Uswitch.com is calling for telecoms providers to let customers walk away penalty-free if they find the increases unaffordable, and for industry regulator Ofcom to put an end to inflation-linked price increases.   

Ernest Doku, telecoms expert at Uswitch.com, comments: “With inflation at its highest level in 20 years, many mobile and broadband consumers will have never experienced  price rises like these before. 

“Worryingly, more than half of people do not know these mid-contract rises are on their way and many more are unaware of how they are calculated.

“With most of the main providers planning increases there is nowhere to hide, and consumers are currently unable to escape mid-contract rises that are written into their contracts without paying a penalty charge.

“Ofcom should be tightening its rules regarding mid-contract increases being linked to the now rising inflation, so that all subscription pricing is spelt out in pounds and pence. Broadband and mobile users cannot be expected to forecast future inflation rates when they take out their contracts.

“In the meantime, at a time where the cost of living is under real pressure for households, providers should let consumers walk away penalty-free from these excessive, unexpected hikes.” 

 

Find out more about price increases for mobile and broadband customers here.

FOR MORE INFORMATION

Rianna York
Phone: 07817 083 280
Email: rianna.york@rvu.co.uk
Twitter: @UswitchPR

Notes to editors:
Opinium surveyed a sample of 2,000 UK adults from the 17th to 19th January 2022. Results were weighted to reflect a nationally representative criteria.
1. Respondents were asked, ‘Are you currently in a contract with your mobile or broadband provider? Please think of ‘in contract’ as currently being tied to a contract that has not yet expired, usually over a 12- or 24-month period?” The proportion of people that answered ‘yes’ to ‘in contract with mobile’ (53%) was multiplied by the proportion of respondents on a network currently intending a mid-contract price rise (68%). This was then multiplied by the UK adult population of 55.4 million and adjusted for the proportion of respondents (2%) without a mobile. 19.1 million consumers will see their mobile contracts rise mid-term this spring. The proportion of people that answered ‘yes’ to ‘in contract with broadband (75%) was multiplied by the proportion of respondents on a network currently intending a mid-contract price rise (54%). This was then multiplied by the number of UK broadband connections (26.8 million) and adjusted for the proportion of respondents (2%) without home broadband. 10 million households will see their broadband contracts rise mid-term this spring.
2. O2 website
3. Respondents were asked how much they spent per month on broadband and mobile. The averages for each (£29.30 and £21.20) were increased by 11% and then this rise was multiplied by 12 for the yearly extra charge (£38.68 and £27.98)
4. Respondents who had either broadband or mobile services were asked ‘Do you understand the following to be true or false:  Many telecoms providers increase their monthly prices by the Consumer Prices Index (CPI) or Retail Prices Index (RPI) rate of inflation, plus an extra amount on top, commonly 3.9%, so rises can occur mid-way through a contract?’ 48% said no and 8% didn’t know
5. Respondents who had either broadband or mobile services were asked if they agreed with the statement: ‘I think it is unfair that my provider can increase my bill during my contract’. 39% said yes
6. Respondents were asked: ‘Do you know what the most recent published rate of inflation is for the Consumer Price Index?’ Of those surveyed 9% were able to give the correct band of between 5% and 6% 
7. Respondents were asked: ‘Do you know what the most recent published rate of inflation is for the Retail Price Index?’ Of those surveyed 1% were able to give the correct band of between 7% and 8% 
8. Ignoring ‘don’t knows’ 95% of respondents gave a lower answer for RPI than the correct 7-8% band while 70% gave a lower answer for the CPI than the correct 5-6% band.
9. Calculated by taking the proportion of respondents in a broadband contract (75%), multiplying that by the proportion of respondents with a provider currently planning a mid-contract rise (54%) and then by the number of UK broadband connections (26.8 million). This figure is then multiplied by the average yearly broadband bill increase of £38.68 (see footnote 3) to give a cumulative price increase figure. This figure is then adjusted using the proportion of respondents without home broadband (2%) to give the broadband cumulative price increase total for a year. Taking the proportion of respondents in a mobile contract (53%), multiplied by the proportion of respondents with a provider currently planning a mid-contract rise (68%), and then multiplying this by the UK adult population of 55.4 million and then by the average yearly mobile bill increase of £27.98 (see footnote 3) gives a cumulative price increase figure. This figure is then adjusted using the proportion of respondents without a mobile phone (2%) to give the mobile cumulative price increase total for the year. Adding these adjusted totals together gives a combined figure of £921 million. 
10. Respondents who had either broadband or mobile services were asked if they agreed with the statement: ‘I wouldn’t have taken out my contract if I had known my provider was going to increase my bill’. 10% said yes. 
11. Respondents whose provider/s was planning to increase their broadband and/or mobile bill were asked: ‘You mentioned your provider is planning to increase your bill, are any of the following true to you?’ 16% agreed with the statement: ‘It is going to put me in a difficult financial situation’. 

About Uswitch 

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.