UK ISP BT and EE Set Out Approach to Annual Broadband Price Hikes

BT’s consumer division (inc. EE and Plusnet) has today set out their approach to this year’s annual price hikes, which will see them increase their broadband, phone and other prices by the contracted CPI of 10.5% plus 3.9% – for a total of 14.4% – for the “majority” of their customers from 31st March. But there are exceptions.

As per this morning’s article (here), many of the market’s largest and most established broadband and phone providers have in recent years adopted a model that links their annual price increases to UK inflation, which in this case reflects the Consumer Price Index (CPI) rate as published in January each year, plus an additional 3.9% on top.

On the one hand, this method provides customers with more transparency and predictability over future price rises, but on the other hand, it makes it harder to exit your contract when the increase itself hits (Ofcom’s rule against mid-contract hikes work here). All of this also leaves consumers vulnerable when inflation goes through the roof, much as it’s now doing.

However, BT points out that this year’s hike won’t impact all of their customers, with about 3 million being safe from it. The reason for that is because, firstly, they’re “freezing the price of line rental, call packages, call charges and call add-ons for our landline-only customers” (i.e. those who do not have fixed broadband with BT or another provider).

In addition, BT’s social broadband and phone tariff – ‘Home Essentials‘, as well as EE’s similar Mobile Basics, Pay-As-You-Go, BT Basic and Home Phone Saver customers will also see their prices frozen through 2023 as part of the operator’s commitment to support those who need it most.

Nick Lane, BT Consumer’s MD of Customer Services, said:

“For those customers who will be affected by the price change it’s important to put our price change in context. Telecommunications as a sector provides incredible value for money when you think that our customers are using as much as 50 per cent more data every single year. In fact, customers in the UK are some of the highest data users in Europe. At the same time, the cost of their combined fixed and mobile services are among the lowest in the region.

We are also a small proportion of household spend every month – recent research says this is around 3.8%. And, with everything else on the rise, that small proportion is in fact decreasing: the average household spend on telecoms services has fallen by 19% compared with what it was five years ago.

With the CPI rates now published, we expect our price change will mean an average increase of just over £1 a week for most people on broadband or mobile. Meanwhile, costs are going up by considerably more for everything else – energy costs the starkest example – with consumers not getting anything extra for their money. Just the same thing, only more expensive.”

In playing devil’s advocate, it’s also important to point out that broadband and mobile operators are NOT immune to cost increases. Most ISPs are suffering under the burden of rising supplier and lease costs, as well as energy prices and the ever-rising levels of consumer demand for data, which is partly touched on above.

Internet providers are also frequently adding all sorts of new services (e.g. FTTP), developing new systems and implementing costly new Ofcom rules and government legislation, which means that price hikes, especially in a market of extremely high inflation, are hard to avoid. But if customers really want to fight against this, then vote with your feet and switch, or at least give haggling a try (Retentions – Tips for Cutting Your Broadband Bill).