Mobile phone customers could end up paying £120 more for their contracts than they initially bargained for when mid-contract price hikes come into play next year – according to research compiled by Which?
Now, the consumer group is calling on Ofcom to ban such hikes, as British customers look to more increases next year.
Every April, mobile phone companies are able to increase bills based on the CPI or RPI measure of inflation, as well as an additional 3.9%. Providers who use the CPI measure are likely to raise prices in excess of eight per cent in April, which could add to the already 14% rise witnessed by some customers earlier this year.
Which? found that on average, EE, Three and Vodafone customers could bare witness to rises of more than eight per cent next year, while O2 customers could be hit with massive rises of more than 10% – on top of the 17.1% some users already saw in 2023. O2 is one of the only providers which uses the RPI level to calculate rises.
The Mirror reports that based on prices on the providers’ websites for a 12-month SIM-only contract with unlimited data, texts and calls, EE and O2 customers could be in for the largest increases of £20.58 and £24.02 respectively in the year from April 2024. Three customers meanwhile, could see smaller hikes annually of £15.88 on average.
Taking into consideration both rounds of hikes for customers who took out 24-month SIM-only contracts, O2 customers could see the biggest potential price hike of up to £124.21 – with the cost of an original contract rising from £672 to £796.21. EE customers meanwhile could see contracts rise from £673 to £774.17, while Three and Vodafone customers could see rises of up to £87.57 and £80.27 respectively.
Which? has dubbed the price hikes ‘especially unfair’ when customers of the big four companies could be paying a lot less elsewhere if they could leave contracts without exit fees. SIM-only customers meanwhile who are in contract and want to avoid hikes will most likely be charged early exit fees too, which typically consists of the remainder of a contract in a lump sum.
This could amount to several hundreds of pounds. Responding to findings, Which? has launched its ‘The Right to Connect’ campaign – which calls on telecoms providers to give ‘clearer and fairer’ contracts for customers pertaining to pricing, while hoping to ban mid-contract rises outright.
Rocio Concha, Which? director of policy and advocacy, said: “A good broadband and mobile connection is essential to modern life. It’s completely unacceptable that these unpredictable mid-contract price hikes have been allowed to continue in the telecoms industry for so long. These contract terms dump the burden of managing inflation risk onto customers, obfuscate prices and undermine competition.
“Which? is calling on all providers to do the right thing and cancel 2024’s above-inflation price hikes. Ofcom should also use its review to finally ban these unjust mid-contract price hikes that harm consumers and undermine competition. Consumers need to know exactly how much their contract will cost when they sign up.”
Ofcom is currently reviewing inflation-linked mid-contract price rises amid concerns that they don’t give consumers sufficient certainty and clarity about what they can expect to pay. This consultation paper is set to be published in December.
An EE spokesperson told Which?: “We understand that price rises are never wanted nor welcomed, but recognise them as a necessary thing to do given the rising costs our business faces. Our price rises are annual, contracted and transparent, and we make this clear when customers sign up or renew their contracts.
“With the average price increase just above £1 per week, and two million pay-as-you-go customers were excluded from price changes in 2023 – we’re also doing all we can to ensure our services are accessible to the widest group of customers possible through our market-leading social tariffs.”
An O2 spokesperson said: “We’re always clear and transparent with customers about any future price increases, which are reinvested back into our network to meet significantly increased demand for our services. While we know that price changes are never welcome, this year bills increased by an average of 10%, or less than 10p per day, which is below inflation, and reflects the fantastic value we provide for fast and reliable connectivity that is used almost constantly.”
A Vodafone spokesperson said: “It’s too early to make any comments on next year’s figures. We will continue to ensure customers registered as financially vulnerable can stay connected by offering social mobile and fixed tariffs – these aren’t affected by any price increases.” Meanwhile, Three provided Which? with ‘clarifying information’ while declining to comment further.
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