Millions of mobile and broadband customers to be hit with ‘unfair’ bill rises due to rule change coming in DAYS
MILLIONS of mobile and broadband customers on cheaper contracts could be hit with “unfair” bill rises within days.
Telecom firms have been ordered by the regulator Ofcom to display mid-contract price increases in pounds and pence from January 17.
Prices are usually hiked in April in line with either the Consumer Price Index (CPI) or Retail Price Index (RPI) measures of inflation plus up to 3.9%.
Currently, when customers take out a contract, they are told what their monthly subscription price will be and that their monthly price will increase every year based on inflation plus an additional 3.9%.
But this will be banned under the new rules and customers will instead be shown the exact amount their monthly price will rise by in pounds and pence.
The new rules are designed so customers know exactly how much their contract will rise before taking it out rather than it being linked to future inflation which can go up or down.
However, consumer experts have warned the change might not always see customers pay less, with inflation sat at 2.6% in November.
Inflation hit a 41-year high in October 2022, when some customers saw their bills rise by up to a staggering 17.4% and would have welcomed the new pricing structure.
The new pounds and pence rules will see firms cap the maximum price rises at between £1 and £3 a month.
However, Andrew Ferguson, editor of thinkbroadband.com, said that the shift from complex CPI plus percentage-based rises to pounds and pence increases rules coming into effect later this month may not be as good as they seem with inflation lower.
For example, if you pay £24.99 a month for broadband and your contract increases by £3, that is costlier than what it would be with an inflation-based rise of 6.5% (based on November inflation +3.9%), which would equate to approximately £1.62, according Andrew.
But, on a more expensive contract that costs £59.99 a month, a £3 rise works out better than an inflation-based rise of 6.5%, at £3.89.
Andrew said broadband customers are more likely to be stung by the new rules where rises are most commonly around £3 a month whereas mobile tariffs are generally rising around £1.50 to £2 a month.
Either way, the discrepancy means those on stripped down entry-level broadband or mobile contracts, often individuals from lower-income households, could end up paying more proportionally than those on premium packages.
Martyn James, consumer rights expert, said: “It’s deeply unfair that businesses have opted to hit those who are struggling the most with price hikes – particularly when they have failed to promote the much cheaper social tariffs that most people in need still haven’t heard of.”
An Ofcom spokesperson previously said: “Inflation might be low now, but as we’ve seen in recent years, it can be incredibly volatile, and we don’t think consumers should bear that risk.
“Our intervention means customers will have certainty and clarity upfront about the prices they will pay, so they can compare offers and select the best deal for them.”
How much are firms hiking prices?
BT, which also owns EE and Plusnet, said in April that it would no longer raise prices mid-contract based on a percentage linked to inflation.
All BT and EE customers who took out a new contract after April 10, 2024, are affected.
From March 2025, the price of mobile contracts will rise by £1.50 a month and broadband tariffs by £3 a month.
EE TV customers will have to pay an extra £2 a month.
The provider has said those vulnerable customers on EE Basics or BT Home Essentials contracts will be exempt from any price rises.
Plusnet will also increase its broadband price by £3 per month from the end of March.
Vodafone mobile phone customers will see their bills rise by £1.80 a month while Home Broadband customers will see prices hiked by £3.
Vodafone has said that price increases will not be applied to customers identified as financially vulnerable or those on social tariffs.
Since August 12, 2024, customers joining or re-contracting with TalkTalk will see the monthly amount they pay for their broadband increase by £3 annually in April.
Three has said new and upgrading Three customers will see their annual price rise determined by pound and pence from April.
Broadband increases are capped at £2 and mobile rises between £1 and £1.50 depending on the data allowance.
Tesco Mobile said someone on a £14.99 a month a deal would see their monthly contract price increase by 90p in April.
Customers on a £30 a month deal will see their basic monthly price increase by £1.80.
These increases suggest that the typical cost of a customer’s contract will rise 6% from April 2025.
Cut your telecom costs
Switching contracts is one of the single best ways to save money on your mobile, broadband and TV bills.
But if you can’t switch mid-contract without facing a penalty, you’d be best to hold off until it’s up for renewal.
But don’t just switch contracts because the price is cheaper than what you’re currently paying.
Take a look at your minutes and texts, as well as your data usage, to find out which deal is best for you.
For example, if you’re a heavy internet user, it’s worth finding a deal that accommodates this so you don’t have to spend extra on bundles or add-ons each month.
In the weeks before your contract is up, use comparison sites to familiarise yourself with what deals are available.
It’s a known fact that new customers always get the best deals.
Sites like MoneySuperMarket and Uswitch all help you customise your search based on price, allowances and provider.
This should make it easier to decide whether to renew your contract or move to another provider.
However, if you don’t want to switch and are happy with the service you’re getting under your current provider – haggle for a better deal.
You can still make significant savings by renewing your contract rather than rolling on to the tariff you’re given after your deal.
If you need to speak to a company on the phone, be sure to catch them at the right time.
Make some time to negotiate with your provider in the morning.
This way, you have a better chance of being the first customer through on the phone, and the rep won’t have worked tirelessly through previous calls which may have affected their stress levels.
It pays to be polite when getting through to someone on the phone, as representatives are less inclined to help rude or aggressive customers.
Knowing what other offers are on the market can help you to make a case for yourself to your provider.
If your provider won’t haggle, you can always threaten to leave.
Companies don’t want to lose customers and may come up with a last-minute offer to keep you.
It’s also worth investigating social tariffs. These deals have been created for people who are receiving certain benefits.
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