Home
 » ISP News » 
Sponsored

Tesco Mobile Seeks BAN on Broadband and Mobile Price Hikes

Tuesday, March 2nd, 2021 (8:00 am) - Score 7,680
tesco_mobile_uk_2020

The UK mobile division of Supermarket giant Tesco and charity Money Advice Plus have today jointly called for a “ban on price hikes” by broadband ISPs and mobile operators, although in the context they appear to be focusing on “misleading” mid-contract price rises rather than all price hikes.

The position is being supported by the results of a new Tesco-commissioned YouGov survey into unexpected price hikes, which interviewed (online) 2,058 UK adults between 26th and 28th of February 2021. The results found that 9% of respondents have been unable to pay essential bills since the COVID-19 pandemic began, while 38% admit even a small increase to household or utility bills would cause them to worry financially and 14% fear it could cause them to face potential disconnection because of arrears.

NOTE: Tesco is an O2 based Mobile Virtual Network Operator (MVNO).

At the same time Tesco Mobile notes that a growing number of mobile and broadband operators have recently announced a raft of “unexpectedly high mid-contract price rises this year,” which have reached as high as 4.5% for Three UK, Vodafone, BT and EE customers. In fairness though, such things have long since morphed into somewhat of an annual event, so for anybody paying attention they shouldn’t be totally “unexpected.”

Summary of Additional Survey Results

— 42% believe their phone has become more essential to them during the pandemic.

— 50% of those with a mobile phone contract weren’t even aware a network provider could put up their prices mid-contract and part of that may be due to unfamiliar jargon (see below).

— 48% don’t understand the term RPI (Retail Price Index), while 69% are unaware of what CPI (Consumer Price Index) means – both are different types of inflation.

Inflation is a measure of the rate of rising prices of goods and services in an economy (e.g. if something costs more to produce, then the end product to consumers may also cost more). Mobile operators have long linked annual price rises to changes in the level of inflation, although this same trend has recently also spread to some of the largest home broadband ISPs too (usually inflation plus an additional %).

In any case, Tesco Mobile is calling on other networks to “reverse prices hikes this year” and join them in promising to keep prices frozen throughout the duration of their customers’ contracts. On this point the operator has somewhat of a vested marketing interest, since they already offer capped contracts as standard and include a Tariff Promise – guaranteeing no mid-contract price rises due to RPI.

Tom Denyard, Tesco Mobile CEO, said:

“Beyond being misleading, our research has shown that mid-contract price rises in our industry will have a financial impact on those who have already been hit hard. There could not be a worse time for networks to implement their biggest price rises. For a family of mobile users, the increased costs mean less items in the weekly shopping basket or additional pressure to pay a bill that was higher than expected.

Telecoms companies have never played a more important role in people’s lives. During one of the most uncertain financial times on record, and at a time of physical isolation, this is not a time to be making a phone harder for someone to afford. That’s why we are calling on other networks to reverse price rises this year.”

At the same time as this, providers are frequently adding all sorts of new services, running big first year discounts, adapting to new rules (e.g. automatic compensation) and developing new systems (e.g. improved switching). On top of that consumers are also gobbling significantly more data and COVID-19 has resulted in many operators offering special discounts, billing flexibility or additional content to customers. All of these things add costs.

The difficult thing for operators is that they still have to find some way of balancing their books, so if a price rise is delayed in one year then they may need to put up more prices elsewhere, or introduce a bigger rise in the following year, to compensate for that loss.

On the other hand, short of a major economic shock, there’s arguably no reason why mid-contract hikes should have to be the norm (package pricing could be pre-planned around the need for future rises) and smaller providers often manage to avoid doing them at all. In any case we suspect that Tesco’s position will fall on deaf ears at the largest operators. Only Ofcom’s position, or political pressure, will have any real impact.

Leave a Comment
4 Responses
  1. Avatar Aled says:

    I am falling on the side of “either don’t inflation link, or limit it to the actual rate of inflation”. Anything beyond inflation is just an extra hidden price rise. It’s not like you cannot estimate your internal costs over a 24 month contract, there usually is a doubling of price after the initial contract ends too, so I am not sympathetic to their plight.

    Openreach charge £7ish to their businesses to resell 40mb Internet, so adding a WiFi router and crap PR ad campaigns doesn’t bump the price to £50pm.

    They’re doing it cause they can and sector management think they need to join the herd or lose their bonus.

    Seriously now, CPI is running at 0.7% and EE think this is how inflation works:

    “CPI+3.9% is the Consumer Price Index (CPI) with an additional 3.9% added by us… A new rate is published every month. We’re using the December 2020 figure published in January 2021 – this rate is 0.6% for CPI. This, plus the additional 3.9%, totals a 4.5% increase to your plan”

    1. Avatar blueacid says:

      I completely agree with everything you say; surely the extra 3.9% has the effect of itself increasing inflation.
      I would quite like to see them forced to advertise clearly the total expected additions – even if inflation is 0% they’ll still be increasing by 3.9%. Perhaps by having to clearly state their own in-contract price rises they’ll reconsider.

      One clarification though, the £7ish charge from Openreach only pays for that literal FTTC connection. The essential cost of paying for backhaul from the exchange to the ISP core network, and then for transit/peering onward from there does also need to be paid for. This isn’t a small cost, so it isn’t necessarily fair to compare the 7PCM to the ~40PCM retail cost and conclude that they’re raking it in!

    2. Avatar Aled says:

      OK I’ll take your word on that.

      I recently dropped BT 38meg £53pm broadband, to get an 80meg service along the same cable by a reseller (Vodafone) for £23pm. It’s just embarrassing how the industry works sometimes.

  2. Avatar M says:

    Sorry but using inflation is just an excuse. If it was linked to the rate of inflation then the price increase would all happen at the same time every year and be the same amount? The fact they are not just shows it’s really a money grab. Of course the providers could swallow a bit of the costs anyway as I doubt they pay all there staff the rate of inflation in pay rises across the board every year if it’s 4% etc.
    Have to say I’d support Tesco on this one. And what about those who increase by the rate of inflation plus what ever they feel they can get away with like Sky?
    The price rises are why I don’t use EE considering they are the most expensive provider and then generally seem to increase rates yearly at a higher amount then anyone else. Likewise don’t use BT etc.

    As for it being no secret, well you could have been on Tesco Mobile all your life, then switch to Three or EE only to find a price increase mid term, and discover no you cannot cancel your contract based on that and you need to buy out the remainder of the contract.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comments RSS Feed

Javascript must be enabled to post (most browsers do this automatically)

Privacy Notice: Please note that news comments are anonymous, which means that we do NOT require you to enter any real personal details to post a message. By clicking to submit a post you agree to storing your comment content, display name, IP, email and / or website details in our database, for as long as the post remains live.

Only the submitted name and comment will be displayed in public, while the rest will be kept private (we will never share this outside of ISPreview, regardless of whether the data is real or fake). This comment system uses submitted IP, email and website address data to spot abuse and spammers. All data is transferred via an encrypted (https secure) session.

NOTE 1: Sometimes your comment might not appear immediately due to site cache (this is cleared every few hours) or it may be caught by automated moderation / anti-spam.

NOTE 2: Comments that break our rules, spam, troll or post via known fake IP/proxy servers may be blocked or removed.
Cheapest Superfast ISPs
  • NOW £22.00 (*32.00)
    Speed 36Mbps, Unlimited
    Gift: None
  • TalkTalk £22.00 (*29.95)
    Speed 38Mbps, Unlimited
    Gift: None
  • Vodafone £22.00 (*25.00)
    Speed 35Mbps, Unlimited
    Gift: None
  • Hyperoptic £22.00
    Speed 50Mbps, Unlimited
    Gift: Promo Code: EASTERSALE
  • xln telecom £22.74 (*47.94)
    Speed 66Mbps, Unlimited
    Gift: None
Large Availability | View All
Cheapest Ultrafast ISPs
  • Vodafone £26.00 (*29.00)
    Speed: 100Mbps, Unlimited
    Gift: None
  • Virgin Media £28.00 (*44.00)
    Speed: 108Mbps, Unlimited
    Gift: None
  • Hyperoptic £29.00 (*35.00)
    Speed: 150Mbps, Unlimited
    Gift: Promo Code: EASTERSALE
  • TalkTalk £29.95 (*39.95)
    Speed: 145Mbps, Unlimited
    Gift: None
  • Leetline £34.99 - 43.99
    Speed: 100Mbps, Unlimited
    Gift: None
Large Availability | View All
The Top 20 Category Tags
  1. FTTP (3154)
  2. BT (2907)
  3. FTTC (1843)
  4. Building Digital UK (1842)
  5. Politics (1820)
  6. Openreach (1736)
  7. Business (1576)
  8. Mobile Broadband (1366)
  9. FTTH (1355)
  10. Statistics (1335)
  11. 4G (1175)
  12. Fibre Optic (1121)
  13. Wireless Internet (1097)
  14. Virgin Media (1089)
  15. Ofcom Regulation (1086)
  16. EE (775)
  17. Vodafone (767)
  18. TalkTalk (729)
  19. Sky Broadband (711)
  20. 5G (655)
Promotion
Helpful ISP Guides and Tips
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
Sponsored

Copyright © 1999 to Present - ISPreview.co.uk - All Rights Reserved - Terms , Privacy and Cookie Policy , Links , Website Rules , Contact