It would be unthinkable for telecoms providers to push through with mid-contract price hikes
Since 2020 most major broadband and mobile providers have introduced inflation linked price increases in their contracts. Under this practice, providers base their price increases on whatever inflation is running at, plus a mark up - a questionable practice that has made it difficult for consumers to understand exactly what they are signing up for and to shop around.
In the last couple of years, when inflation has hit a 40-year high, some customers have been buffeted by increases of up to 17 per cent.
Noticing the unfairness, Which? campaigned for those unpredictable hikes to end. We believe that consumers deserve clarity over how much they are going to spend on their broadband and mobile services when they sign a contract, not nasty shocks every spring.
Our campaign spurred Ofcom, the media regulator, to investigate the issue in more detail. After spending time crunching the numbers, Ofcom concluded that the practice of inflation-linked price rises can lead to ‘substantial consumer harm’ and is consulting on banning it by the end of the year.
It’s a move which will protect millions of households from being blindsided by unfair price hikes on top of the other increased expenses consumers are battling, such as the cost of food and energy.
Yet while Ofcom’s intervention should be celebrated, there is currently nothing stopping providers from following through with unpredictable mid-contract price hikes in Spring as new rules won’t take effect until later this year.
There is every reason, then, to believe that several providers will simply plough on regardless, as they did last year even after the government warned it was “not the right thing to do”.
Many have barely tried to justify the increases, beyond vague mentions of infrastructure improvements without substantive evidence that the money has been spent in this way.
It would be unconscionable for providers to read the judgement handed down by Ofcom, to know that their decision would pile further misery on consumers already battling the worst cost of living crisis in decades, and to simply plough on regardless.
Which? estimates that around a third of UK households with a broadband contract will begin to see their bills increase from the start of April. Our research has found major firms are set to generate more than £400 million by exploiting this practice.
And for customers who’d rather not pay the extra money? Exorbitant exit fees, which could be as high as hundreds of pounds. Either way, consumers lose.
That’s why we’ve today taken out full-page adverts in national newspapers to highlight the unfairness of these price hikes. We hope the customers of these firms will join us in telling their providers exactly what they think about this practice.
Ultimately, connectivity isn’t a metropolitan luxury, but a necessity for modern life. A reliable internet or mobile connection helps us stay connected with friends and family, work from home, navigate our way to new places and access services like online banking and government services.
The millions of people who rely on these services shouldn’t be punished with unpredictable price hikes before new rules are introduced. Providers have the power to call off the hikes in Spring. They must do so.
Rocio Concha is Which? Director of Policy and Advocacy.
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