Phone and broadband users face ‘unfair’ price hikes says Which?

Phone and broadband users face 'unfair' price hikes says Which?
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Broadband and mobile phone firms should ditch plans for “grossly unfair” bill increases this spring, argues Which?

Consumers are still facing price rises linked to inflation plus an extra charge, the consumer group says.

That is despite new rules that are expected to come into force later this year that will ban this approach.

BT said it had been “clear and transparent” over its rises. Shell Energy Broadband said it was keeping rises below those of its rivals.

Other phone and broadband companies declined to comment on Which?’s figures, which suggested some customers could be paying up to £35 more for their broadband over the next year and up to £27 more for a Sim-only phone contract, after prices rise in April.

The alternative – paying a fee to exit the contract early – was often much more costly, as much as £339 for some Vodafone customers, Which? said.

Rocio Concha, director of policy and advocacy for the consumer group, said it was “outrageous” that firms were forcing their customers to accept big price hikes, or face punitive exit fees.

“Telecoms providers must do the right thing by halting unfair price hikes immediately, rather than piling more misery on their customers,” he said.

Access to the internet is increasingly being seen as a basic necessity, akin to a utility such as electricity and gas.

Shopping, education, entertainment, socialising and accessing key government services and information rely on internet access, prompting a campaign from Which? for clearer and fairer pricing for telecoms customers.

Last spring, many broadband and phone customers were shocked by steep price increases.

That is because in 2022 the cost of living rose sharply and phone and broadband providers currently calculate bill rises based on inflation – using either the CPI index or the typically higher RPI index – then add on an additional 3.9% or similar figure.

In the wake of those price rises last year the regulator Ofcom produced a report that found this way of presenting mid-contract bill rises caused “substantial consumer harm” because it was less transparent and made it harder to shop around for the best deal.

Ofcom is now consulting on new rules, likely to come into force later this year, that will require firms to show future bill rises “in pounds and pence” rather than as an inflation-linked formula.

Which? says phone and broadband providers who are still putting up prices this April according to the old system, or who are tying new customers into 12 or 24 month contracts using the old methods, are cynically cashing in before the rules change.

By Which?’s calculations EE mobile customers face a price hike of £24.84 over the coming year from April. But leaving the contract would incur a £289.64 exit fee. Other firms put their customers in a similar “trap”, Which? said.

Customers who have BT broadband will pay £35.92 extra in the coming year. If they wanted to switch to another provider they would face an exit fee of £218.64, Which? said, assuming they are a typical customer with 12 months left to run on the contract.

Broadband customers of Vodafone, EE or TalkTalk would see slightly lower price rises, but also faced exit fees that dwarfed the price rises, in the case of a Vodafone Sim-only mobile contract, the exit fee could be as high as £339.71, Which? said.

BT, which also owns EE and Plusnet, said its upcoming 31 March increase, calculated using CPI measure of inflation, which was 4% in December, plus an additional 3.9%, would amount to around £3 per month for most customers.

That reflected the “considerable investments” being made in the network and support for customers facing financial hardship, including through the social tariff that it offers qualifying customers, BT said.

The firm added that it already plans to switch to a new pricing model moving away from the old inflation-linked calculation “in early summer”, before Ofcom’s new ruling is implemented.

Ofcom expects its new rules to come into effect in the autumn.

A spokesperson for Shell Energy Broadband said the firm had experienced “the same inflationary cost pressures as everyone else” resulting in the need for price rises. However 2024 price increase would be lower than their terms and conditions allowed for, they said.

TalkTalk disputed Which?’s calculations. Three and Vodafone declined to comment when approached by Which?


By David Ryckman