Britain’s telecoms regulator is being urged to intervene over concerns that mobile and broadband operators are “lining their pockets” with £2.2bn of above-inflation price rises during the cost of living crisis.
While ministers have urged employees to show pay restraint, the mobile phone and broadband firms are facing a consumer backlash as they announce record price increases.
Ofcom, the regulator, is under mounting pressure this weekend to take action to protect consumers, as experts warn price rises for some customers could be as high as 17%.
Some firms have already confirmed increases of more than 14%, which will affect customers who have fixed-term contracts or are out of contract.
BT, which also owns the EE brand, says its increases for mobile and broadband customers will be 14.4%, which is the consumer prices index (CPI) inflation rate for December plus an additional charge of 3.9%. Three UK is also increasing bills in April by 14.4% for broadband and mobile users who joined after 1 November 2022.
One of the biggest phone operators, O2, says some customers will see their bills increase by the retail prices index (RPI), now at 13.4%, plus another 3.9%. It will base its price rise on the RPI figure for January, to be announced later this month, and says any predicted figures are “speculative”.
Matthew Upton, director of policy at Citizens Advice, said: “As we all pull together in a cost of living crisis, broadband and mobile companies should be doing what they can to help – not lining their own pockets.
“We’re expecting millions to pay, on average, almost £90 a year extra on mobile and broadband bills – that’s £2.2bn in hikes at the worst possible time. We keep calling on these firms to do the right thing and axe their price hikes, but they’ve not listened. It’s now time for Ofcom and the government to force them.”
In September, Lindsey Fussell, Ofcom’s group director for networks and communications, urged mobile and broadband companies “to think very carefully about what is justified during an exceptional period of hardship for many people”. Few of the majorcompanies have heeded her warning. Retail prices are not set by the regulator because the market is considered to be very competitive.
While Tesco Mobile promotes its products on the fact that it does not raise prices during a fixed contract, most other telecoms providers implement price rises mid-contract. Ofcom is already investigating whether these in-contract price rises are set out clearly enough before customers sign up.
Alistair Young, 41, an EE customer and charity worker from London, says while he knew there would be in-contract price rises, he could never have predicted how high inflation would go. He says he must continue to pay his higher bill of more than £70 a month or face a penalty which he has calculated at £460 to exit his contract.
“They’re just jumping on the bandwagon. If one of them does it they all do it,” he said. “I would never touch one of the big mobile phone providers again.”
Richard Neudegg, director of regulation at the price comparison website Uswitch.com, said: “Because the inflation rate is sky-high at the moment, broadband and mobile prices could be increasing [by] up to 17.3% – adding more pressure to consumers during the current cost of living crisis.
“There is no justified reason why telecoms providers should be able to increase the monthly price mid-contract, with no right of exit. Policymakers should step in and tighten the rules so that the price that people sign up to is fixed for the duration of their contract, or at least give people the chance to leave penalty-free if there is a rise.”
The mobile and broadband operators say they are transparent in their pricing and need money to invest in their networks to meet growing demand. An O2 spokesperson said: “Unlike other providers, we freeze the cost of device repayments so many customers will have half or more of their bill protected from any increases. We’ll clearly communicate any price changes to customers directly.”
BT said customers under financial pressures had tailored services, such as BT Home Essentials, and would be exempt from the price rises. A spokesperson said: “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 contract.”
An Ofcom spokesperson said: “Companies must treat customers fairly – particularly during an exceptional period of hardship for many households. Our rules are clear: everyone must be told upfront about any future price rises before they sign up, and we’re investigating whether phone and broadband firms have been sticking to this.”