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Three UK and Vodafone Adopt Inflation Busting Price Hikes UPDATE

Tuesday, November 3rd, 2020 (4:45 pm) - Score 24,288
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Mobile operators Three UK and Vodafone appear to be taking a leaf out of BT’s (including EE and Plusnet’s) book by becoming the latest telecoms operators to announce annual price hikes that will go beyond their usual RPI or CPI (inflation) linked increases. But with COVID-19 triggering another lockdown their timing couldn’t be worse.

We start with Three UK, which until recently had opted to increase their monthly prices each May by an amount up to the January Retail Price Index (RPI), which is a rate of inflation and was last set at 2.7%. But customers who joined the operator after 29th October will find that they have abandoned this approach and are instead adopting a flat annual increase of 4.5%, which is to be applied each April (here).

The move comes shortly after the operator scrapped their popular “Go Binge” service from new 4G and 5G based mobile plans, which previously gave customers access to unlimited data (mobile broadband) when streaming from popular video, music and social media sites (here).

As usual this change won’t affect existing customers, at least not until it’s time to re-contract or upgrade again. Sadly, Vodafone also seem to have a similar plan.

Vodafone’s Price Hike

Vodafone has today revealed that if new or upgrading customers sign-up to new contracts from the 9th December 2020, then they will in the future also see an increase in their monthly bills and it’s another inflation buster. “This will be made in April 2021, based on the Consumer Price Index (CPI) plus 3.9%.” The CPI rate they use will be the one published in January each year.

Meanwhile existing customers will continue to see a normal increase in their monthly bills each April, based on the Retail Price Index (RPI), at least until you need to re-contract or upgrade on to the new terms.

A Vodafone spokesperson told ISPreview.co.uk:

“We recognise no one wants to see price rises, but these are necessary for us to continue investing in our networks, products and services. This year, our annual price rise will change to the CPI rate plus 3.9%, for new and upgrading customers from 9 December.”

At this point consumers will want to know why so many operators are starting to break with the previous mould. Part of the reason will no doubt have to do with the usual issues of rising consumer demand for data and other services, but that alone does not explain the much larger hikes.

In a recent blog post Vodafone’s CTO, Scott Petty, also highlighted the cost of both deploying new 5G networks (e.g. a report by McKinsey suggests the total cost of mobile access networks could increase by up to 300% over the next 5 years) and the additional strain being placed on them by the Government’s sudden U-turn to ban Huawei (Three UK and Vodafone all have a lot of non-core kit from Huawei that will have to be replaced).

Meanwhile other factors may include the need to adopt new rules from Ofcom (e.g. banning operators from selling locked handsets – here), as well as any new costs associated with future spectrum auctions (here), implementation of the new Shared Rural Network (SRN) to boost geographic 4G coverage and any costs associated with making their services more environmentally friendly.

Nevertheless, doing this at the same time as many people are losing their jobs and a second COVID-19 related lockdown is occurring seems unlikely to win much favour among consumers.

UPDATE 4th November 2020 – 7:07am

We’ve had a comment from Three.

A Spokesperson for Three UK said:

“Like other mobile providers, our pay monthly plans are subject to an annual price change. We have taken the decision to apply an annual fixed percentage increase of 4.5% for new and upgrading customers from 29 October 2020. This means, for example, that a £20 per month contract will see an increase of 90p per month. This change will be applied in April 2021.

We believe that integral to a great customer experience is certainty and transparency. With a fixed price change compared to the variable and unpredictable increases applied by other MNOs, customers will not have to rely on a fluctuating RPI or CPI rate to clearly understand the full cost of their contract.

Central to providing the best possible service and range of products is our network, and we must invest more to deliver on this. We are investing +£2 billion in the UK’s fastest 5G network to ensure we have a strong network, capable of delivering better connectivity, every day, for every customer.”

Leave a Comment
23 Responses
  1. TheTruth says:

    They always have one reason or another to put the prices up.

  2. Buggerlugz says:

    Three couldn’t have announced this at a worse time, not just with the pandemic but coupled with the utterly shocking level of service provision and appalling customer service they currently supply they’re home broadband customers its just another slap in the face.

    Take my Three service today, totally incapable of web browsing with hanging webpages constantly using the 3internet APN, but I switch to the three.co.uk (mobile phone) APN and the problem goes away. Okay, its still managing only 10Mbps but that’s three all over these days.

    Three (if you can be bothered to remove your ostrich heads out the sand they’re buried in.) Your customers deserve much much better!

    1. Gilbert says:

      Use the faster one then – anyone on Voxi can use the vodafone apn but the speeds are a tad slower than pp.vodefone.co.uk BUT the former is more stable than the latter

  3. Steve says:

    They are protecting themselves from possible negative inflation which might happen due to Covid and Brexit. Otherwise they might find themselves having to reduce contract costs. That said I haven’t checked existing terms and conditions to see if they are protected from this. Either way if negative inflation hit without a specified increase above inflation they wouldn’t get anything.

    1. Stephen Wakeman says:

      I don’t think the threat of negative inflation is what’s behind this since it applies only to new customers and those upgrading. That is not the bulk of their customer base. It’s also not aligned to the reasons they’re giving publicly, and whilst there’s no requirement for them to divulge anything other than for the sake of optics, that it doesn’t add up to that just further suggests that is not the reason.

      “They might find themselves having to reduce contract costs”. Why? Price increases occur every year irrespective of inflation or the CPI because we’ve seen years where interest rates are tiny and CPI is almost static and yet the prices go up still. In the event of a negative inflation rate that comes about suddenly, keeping the contract prices the same as when there was inflation, increases the yield from each customer, rather than decreasing it.

      As telecoms is part service, part physical product, it’s not likely to be as affected by a drop in demand or an over supply situation commonly associated with negative inflation. Say Brexit is a disaster (hard to argue anything else at this point). People aren’t suddenly not going to want or need mobile phone service are they? There will not be an oversupply of telecoms service. Thus the demand is not especially elastic. What you’re more likely to see over a longer term is that the contemporaneous impact on jobs and income will cause consumers to become more value oriented in the spending on handsets as these are the big impacts on overall contract prices, at least during the minimal term period. You’ll have fewer people plumping for a £1K handset and more people holding on to handsets for longer and just paying for their airtime.

  4. Random Precision says:

    I’ll bet within 18 months they’ll all reintroduce roaming charges within the EU too.

  5. Raineh says:

    Three have always been a shambles but any price increase is another level when they can’t even supply what they advertise.

  6. Paul Barrett says:

    Well just got in time
    I have 2 Unlimited everything mobile SIM’s at £16 pcm each
    subject to May RPI increases.

    Plus 3 broadband services at £17 pcm at May RPI increases.

    That is the cheapest in the UK.

    I won’t be cancelling them.

    Indeed come the time I do I will offer the contracts to friends or family as I believe they inherit the same conditions.

    Just got the last mobile SIM 8n time about 8 days ago

  7. adslmax says:

    complaint to your local MP’s to stop this crazy price increase during covid-19. Bloody greedy.

  8. Mr stewart parker says:

    I pay for a 5g service never had any 5g in this area and to make matters worse there’s nothing forecast this year or next should gone to a network that can’t supply a 5g service

    1. Gilbert says:

      i Have a service I can get 5G when I go to the places around me – nothing here in this part of London. I get faster speeds on the tube!

    2. GNewton says:

      “I pay for a 5g service never had any 5g in this area ”

      Curious: Why do you subscribe and pay for a service you can’t get in your area?

  9. David Peterson says:

    Three’s not worth an increase. The amount of times their network has gone down this year is crazy.

  10. Sunil Sood says:

    Am I the only one who hopes Ofcom will step in and stop this practice.

    Firms should be able to forecast anticipated costs when setting their initial prices for the minimum term for a contract.

    1. Gary says:

      Yes, how can this be allowed it is a 233% increase? in the cost of a call, they must want to stop PAYG and get everyone on a contract it will be interesting to see if Ofcom steps in I doubt it.

  11. Roger says:

    Sadly Ofcom let BT/EE/PlusNet get away with this pricing model, so all providers will now follow – longer contract periods with price increases during the contract.

  12. Billy Nomates says:

    I’m desperate to leave Vodafone after they wont fix a broken mast for 2 months. But I still have another 7 months left with them. They won’t fix it and they won’t tell me when it will be fixed and our speed went from 30mbits to around 1 mbit if we’re lucky with upload in the kb’s. Shame because they were really fast for us.

    I wish they would put up my price.. so I could leave.

    1. TenaciousDean says:

      Speak to their dedicated complaints team. The longer it goes on the more credit they will put on your account once it’s all over. Not gonna fix your issue but it will certainly make it sting less.

  13. Buggerlugz says:

    Three “We believe that integral to a great customer experience is certainty and transparency.”

    Is it April 1st today? Spat my coffee all over my desk at that statement.

  14. Alex Colston says:

    Another Ofcom shambles disallowing mid-contract increases unless the contract specifically defined it. The law of unintended consequences hits and they all start allowing above inflation increases in the contracts. RPI was bad enough as it was a bad measure of inflation, this is now worse.

    Reminds me of the Directory Enquiries fiasco, used to cost 30p or similar now is £6 or similar for a number. I haven’t used one in years.

  15. Badem says:

    Just have to vote with my wallet then, have already switched to a SIM only for 2 handsets in last 12 months as the mobiles are working fine and I have no need to upgrade to the latest ‘must have’ mobile.

    Given the uncertainty coming up in 2021 I forsee a lot of these firms struggling to maintain their bumper paychecks to the board and investors…

  16. Lukas says:

    noticed someone mentioning about 5g. And another person commenting: why did You sing up for 5g since theres no coverage in area? Ok lets have it analysed a little bit so: 5g was announced last year (bit before summer as i remember)bit after three ,,hitting UK” with partial coverage in London- never been in london since 2016 but ive read/have seen that its a fact and its real. Following that three announced that will connect 6more cities until autumn 2019 including city i live in- irrelevant which is it. There was massive campain, tv adds, internet blah blah blah that newest technology 5g (which as a fact is avaible in certain places around the world since 2006) is coming into UK not only by three but by most of operators, one after another advertised that for few months. In september 2019 when my contract was running out with three i decided that ill go extend it and ask about 5g. I read before their offer, i knew whats going on and by that time three was solemnly promising to connect city in which i live by 21 october 2019 with almost all city covered with 5g. Their 5g coverage checker at that time was confirming that i will have 5g connected in my area both in doors and oudoors. Of course three very cleverly prepared the offer in a way that most expensive 5g device available on market at that time (note 10plus 5g) is in extremely high price (68pounds per month) and only this is 5g device ready only in this offer. I were told in shop by employees of three, ensured, they promised and for time later three customer service team was contacting me by messaging or random calls informing that 5g is comin IN MY AREA ON 21 OCTOBER. On 21 October or roughly around that day i receiverd sms from three that they connecting 5g. Maximum of 7days and my 5g will be fully available… When i last contacted three (quickly adding that im not their ,,customer” any more) nobody from whole three couldnt tell me when 5g will be avaliable in my area. They are playing such a game with You that after 10mins of conversation You not sure yourself if its New York ot New year. Mocking You with 10pounds of credit, 50% off blah blah blah which later also are never fully applied as i were promised in november last yeat 50% off my contract until theyll connect 5g and three applied that 50% off for month or two and later they brought price up saying that 50%off never happend and later when i ,,explain” them that it actually happened that they promised it they explained back to me that it was one time gesture of good will, three takes best care of its customers and because You experienced issues with services, we gave You one time/two times extra credit. Ohh so nice of You three!!! The fact how its ,,legit” in UK for a) national wide false advertisement of product as 5g is nowhere near what three was advertising last year yet they still are selling offer as someone mentioned that hes paying for 5g connection when he never got 5g at all- clearly mis sold product- where thats legal at all? Another thing is that another person mentioned slow and bad connectivity with even 4g tech, when 4g internet speed start roughly at 15 mbits up to even 150mbits per second- well in UK average mobile internet speed is oscillating somewhere between that range but for about 90% of time i also didnt went beyond 10mbits being with three which is not bad in general but for price of 68quid per month- terrible. Now they announced another price rates changes which are higher than standard rates as i understood in article above,(from 2-3% per year between different operators to 4-5% per year) well im not an oracle but in 5-10years time giff gaff or other networks like that might absolutely dominate the market. Im having giff gaff right now and im not trying to just advertise the provider but to compare: for price of 25pounds i receiving ,,4g” comparable with three internet connection- unlimited in giff gaff for 80gb rest above is supposedly still unlimited but capped to slower speed of below 1mb but i did used 2month ago over 250gb od data downloaded on my phone and i tested whats the speed after this 80gb my testing tool displayed results from 0,3mb (about 20%of time) to even 3,8mb so this was speed which in my flat due to weak signal from three i had being with them for months while outdoors was that 6mb 8mb even 10mb sporadically on occasions i noticed higher speed rates even 37mbit per second. Giff gaff offers unlimited texts, minutes and beside that the offer is exactly the same as three with rest of service. Maybe beside customer service team but up to now and after 4years of dealing with three CST- i dont even want to meet these people in real life afraid of loosing my ,,patience”. Its suprising that as we live in UK and claims that we are so forward technology (not comparing to any particular place but just in general) and the rest ohhs and ahhs about UK- its just ridiculous, ridiculous that bradbands providers are ,,free” to implement whatever tactic possible to drag customers in, over-priced widely advertised not-real offer then later again ,,free” to change deal/offer rules/arrangements what ever they see fit for themself. Beside, this ,,situation” is not only reflecting attitude of companies providing telecommunication services in UK but others following the same tactic. We in Britan comparing to Europe are paying more (even if our currency of pounds sterlings is bit better than euro) when if our moneys are worth more why we have to pay more for worse standard of services- and its a fact as we in UK are having one of slowest average connection speeds across whole Europe?!?! I can see a bit of point of brexit especially since following recent news from the negotiations between EU/UK are like i thought and was saying earlier before- fiasco for both sides but Britain more or less “giving up field” but brexit has a point of disconnecting UK from Europe simply cuz we are not able to compete with them on field of life standards like internet speed for example. So ,,very diplomatically” we are leaving Europe so to not be ,,the worse” member of it- lowering down their standards. I mean being honest someone might feel offended by what im writing and think ,,he shouldnt be living in this country” but totally honestly when i was choosing 10years ago where to live as adult person (21years old at that time) i choose UK it was base on ,,a little of digging” about whats the life standards are here localy and with my hand on a bible i can say that it was pretty damn good comparing to rest of Europe for example stuff like internet speed/price. Now whats we best in Europe is for politicians and i mean it in very british sarcastic way, We still might be socialistic-benefit-based so called democratic Union (wanted to call it a country but its a Union) with super high ego but we definitely dont have prices and standards like our recent for so long time beloved EU ,,partners in crime” (again bit sarcastic). One word resonates in my head and its: ,,paradox” so maybe instead of all of this all philosophical monologue (can monologue be in written form?!?) I should just write a comment : ,,paradox!!!”. Hmmm… lesson for future!-Write short. Save on ink/electricity, Save the planet!!! And God (whatever his name and form) save UK!!!
    Ps. I hope that after posting this i wont get beheaded 😉

  17. clic aquí says:

    Al aumentar el precio de cualquiera de estos insumos, se tendrá una modificación del precio final de los bienes. Algo que podrá disparar el gatillo para que los mecanismos de propagación conviertan a este aumento de precios en inflación.

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