Consumers Want End to Mid-Contract Broadband and Mobile Price Hikes
A new Opinium survey of 2,000 UK adults, which was commissioned by Uswitch during October 2022, has unsurprisingly found that 81% of respondents think mid-contract price increases by broadband ISPs and mobile operators are “unfair” and 80% want more providers to offer fixed price contracts.
The UK communications regular, Ofcom, recently warned that providers should now “consider whether large price rises can be justified at time of exceptional financial hardship” (here), although this appears to have had little impact upon the many providers that continue to implement inflation busting hikes (e.g. CPI + 3.9%). But in fairness, some of those same providers have introduced cheaper Social Tariffs to those most in need.
Nevertheless, the new survey found that 27% of consumers would be stressed if their monthly bill increased by £5, while 41% believe that mid-contract price rises should be stopped entirely and 25% are already planning for their next broadband deal to be a package that does not apply any annual price hikes (this rules out almost all of the largest players).
Advertisement
Finally, the survey found that households supplied by broadband ISP Plusnet were most likely to view price rises negatively, although they didn’t provide any comparable data for the other providers. Overall, 89% of Plusnet’s customers surveyed were said to view mid-contract hikes as either “not very fair” or “completely unfair“.
The real acid test of surveys like this is often whether masses of consumers suddenly move to adopt packages that do not apply mid-contract hikes. But in reality, that often doesn’t happen, as most of the major ISPs now follow the same sort of approach (except Sky Broadband and Virgin Media etc.). Meanwhile, smaller providers, which tend to deliver better pricing stability, are often overlooked due to a lack of consumer familiarity and in other cases packages from alternative networks may not even be available where you live.
At the same time, it doesn’t help that details about mid-contract hikes are often consigned to the small print, where they can easily be missed during sign-up. However, the Committees of Advertising Practice (CAP and BCAP) – sister bodies to the Advertising Standards Authority (ASA) – did recently launch a consultation on new guidance that could require information about mid-contract prices hikes to be more prominently stated in ads (here).
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
« Openreach Launch Buy 3 Get 1 Free Offer on 10Gbps Cablelinks
I have to admit this pisses me off something chronic and I agree that there should be no increases mid-term in the contract.
I think that Ofcom should make that the standard of all contracts for consumers, lets face it we as a business entity don’t have the buying power to be able to force these vendors to give us this option so we get no option from them for this.
I get that it will likely drive up the price of the average contract but at least you know the ‘true’ total cost of that contract length up front unlike now.
I’m not saying that you cant offer the current contract model, just that they must offer the ‘true cost’ by default.
I end up calculating the ‘true cost’ of my contract by taking the likely inflation increase and the time of the year the network up their contract costs. I’m getting a bit tired of having to do that and these days between uninspiring new phones I’m taking on average 4 years now to bother replacing my handset and after 2 years I move to the lowest cost monthly contract to negate their inflationary increases.
Well said, I totally agree..
Furthermore ABOVE inflation hikes is crazy during such periods of instability in global markets and the USD being as strong as it is currently.. Prices to rise even inline with CPI let alone CPI +3.4% is ludicrous. This is just pure profiteering imho something must be done about the situation.
Ok social tarrifs introduced, its about time too! it dosent justify the above cpi model currently used
The USD being as strong as it is is part of the reason for the higher price increases. UK companies pay US suppliers, and other suppliers, in US Dollars. Sterling would be stronger than it is but political choices were made, and voted for, that’ve taken quite a bit of value from our currency.
A possible solution to this would be to have Ofcom force the ISPs to provide a fixed cost contract equivalent for every non-fixed cost contract. This would naturaly cost most in the same way a fixed mortgage costs more than a tracker mortgage. Having said that there is no reason as to why a business can’t estimate the cost of inflation in a 12 months contract. 18/24 months may be a bit more tricky. So perhaps Ofcom can ban price increases within the first 12 months of any contract. They should also look at the true cost increase of providing the service since CPI + 3.9% looks like a rip off to me.
Re nationalise after 98% FTTP Roll out would be my plan as gov 🙂
Just a reminder that the Advertising Standards Authority public consultation on this subject is still open until 17th November.
The ASA does not have the power to ban such deals but they do have the power to make them unattractive and ineffective, so that firms stop offering them. Firms only do it because they are currently allowed to advertise the initial price in large print and a full description of the price increases in small print later on.
Thanks for mentioning this. It’s important to respond to the consultation, because the ASA’s current proposals are very weak.
Essentially, the ASA currently proposes (in the examples in the Appendix) to make the font larger for the phrase “every April your price will rise by CPI + 3.x%”. This is appallingly weak, because it still lets advertisers headline a misleading low number, in an 18 or 24 month contract.
In contrast, Ofcom’s Section C1 guidance correctly forces providers to give example monthly costs after the price rise, in the Contract Information and Summary.
If mid contract rises are banned, then the likely outcome is either shorter contracts offered or an increase in the start price of a contract. Both constrained by competition, to some extent. Be careful what you wish for.
As an alternative, allow contract break on any price rise (to allow consumers to competitive reqoute), not just price rises over the pre-declared mid contract rise (the CPI+xx% formula).
I agree with your suggestion, *ANY* substantive changes in
the contract between ISP and the consumer permits an end
of contract without charge if notified within 30 days.
This does not remove the ISP’s right to include a price
rise clause in the contract details. But it does give
the consumer the right to review the change being applied.
Of course, the fashionable inclusion of this nasty clause
will then desist because the ISP knows the risks of losing
a customer or two.
At the moment these providers are having their cake and eating it by forcing longer term contracts (2 years in most cases for FTTP now) and being able to put it up 15% twice during the contract, depending on when you sign up.
It’s crazy that if you sign up in Feb (or March, for some providers) your price could go up 15% after a month essentially, and it’s fine.