ISP BT Match UK Broadband and Mobile Price Rises to CPI Inflation

Customers of BT’s broadband, mobile and phone services may be interested to learn that the ISP is making a major change to how it handles price rises. From today any new or re-contracting customers to those services will see new terms (T&Cs), which state that future prices will increase by the Consumer Price Index (CPI) each year.

Previously BT had developed a rather controversial tendency of announcing a major new price hike every 9 months or so, which was often followed a few months later by rivals making a similar move (most of their rivals tend to stick to a fairly predictable annual rise). Overall such announcements have tended to increase core monthly pricing by around 4-6% each year, which is often well above the current level of inflation.

By comparison the Consumer Prices Index (CPI) 12-month rate was 2.3% in November 2018, down from 2.4% in October 2018 and some are even forecasting that it could go negative toward the end of 2019 (depending upon the outcome of Brexit and other factors). Nevertheless BT has decided that customers’ prices will now increase by CPI each year.

The T&Cs will change from today, although the first annual increase under this new model will not impact customers until March 2020 (based on the January rate each year). In other words, if the January (published) rate is 2% then from March 2020 your prices would increase by 2% (e.g. a monthly price of £40 would go up to £40.80 in March 2020).

BT Statement

Your broadband, mobile and landline monthly plan prices will go up in line with any change in the rate of CPI. Lots of our extra charges, like out-of-allowance calling rates and your optional add-ons will go up in line with CPI too.

The price of our pay monthly plans increases in line with CPI so we can keep pace with inflation. This reflects the increase in the costs to run and invest in our network and service we provide you, and allows us to invest in new technology and make sure we give you the best possible service.

Under this model customers can expect to see much less aggressive and more predictable price increases. Interestingly this is very different from how most Mobile Network Operators (MNO) conduct their annual price rises, which tend to adopt the Retail Price Index (RPI) instead of CPI. RPI is usually much higher than CPI (in November 2018 it was 3.2%). Mind you mobile operators do sometimes raise prices above inflation too, so this may not strictly stop BT from doing that as well.

As BT states above, prices tend to rise because operators are adding all sorts of new services, developing new systems and consumers are also gobbling significantly more data every year. Suffice to say that service improvements cost money and ultimately the customer will always end up paying. Providers are also under pressure to adopt all sorts of new rules, such as having to cater for the forthcoming automatic compensation system (here).

However one potential benefit to BT of this new approach is that they’re known to have been bleeding customers over previous quarters (they stopped reporting their customer figures around the same time), although by adopting the CPI rule then Ofcom’s mid-contract price hikes rule may become much harder to argue (i.e. this gives you the ability to exit your contract penalty free if you’re hit by a major hike but some inflation linked rises are allowable).

UPDATE 10:25am

We’ve added BT’s main statement below.

A Spokesperson for BT told ISPreview.co.uk:

“We‘re committed to providing our customers with the best experience, service and value in the UK and that is why we are leading the way in the industry. From 2020 we will link any future price changes to the Consumer Price Index (CPI) inflation rate. We will not be increasing prices for BT broadband, home phone and mobile plans in 2019.

While prices changes are sometimes necessary to keep up with increasing costs and to provide the best possible products and services, we know that customers want greater clarity and predictability about any price changes. We’ve listened to our customers and from 2020 we will be moving to once yearly price changes for BT broadband, home phone and mobile customers.”