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Ofcom UK BAN Some Mid-Contract Broadband and Mobile Price Hikes UPDATE6

Tuesday, Dec 12th, 2023 (7:03 am) - Score 6,720
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The UK communications regulator, Ofcom, has today published the outcome of their review into whether mid-contract price hikes that are linked to inflation give mobile and broadband ISP customers enough certainty and clarity about what they can expect to pay. Suffice to say, they’re effectively banning the practice.

Mid-contract price hikes are by no means a new phenomenon in this market, but over the years we’ve seen somewhat of a change as most of the major fixed broadband and mobile operators have since chosen to adopt the same approach that BT first pioneered in 2020 (here). As a result, this year saw providers hit consumers with inflation busting annual mid-contract hikes of 14-16% (here).

NOTE: Under Ofcom’s existing rules, if a provider includes future price rises in the terms of a contract (e.g. CPI/RPI linked increases), then they have to be set out prominently and transparently at the point of sale. Failing to do this might allow customers to exit penalty free.

In the past, most of the major providers preferred to announce a general price increase each year (often reflecting an average increase of 4-6%). But these days they’ve almost all added a new policy into their terms that enables them to increase their prices each year by nearly 4% plus the rate of annual inflation (CPI or RPI) – as published in a particular month (usually January or February).

The problem is that such policies are often hidden away in the small print and many consumers can find them confusing (e.g. they’re not familiar with how ‘inflation‘ actually works or the meaning of terms like CPI or RPI). The fact that CPI/RPI is a highly variable figure, which even the Bank of England (BoE) sometimes gets very wrong in its forecasts, certainly doesn’t help.

Suffice to say that many consumers would like to see the practice of imposing mid-contract price hikes being banned, which could mean that those who take out a new broadband or mobile contract might enjoy the same fixed monthly price for the entire length of their term or at least be given more certainty of future changes. Alternatively, others feel as if just giving people the right to exit their contract, penalty free, whenever an above-inflation hike is introduced, would be enough.

Ofcom’s Decision

Firstly, we should point out that the Advertising Standards Authority (ASA) have already introduced new guidelines to cover this issue (here), which effectively requires providers to be clearer and more transparent with how they present their packages and prices to consumers. But the ASA’s powers are limited, and they cannot outright ban the practice or introduce wider changes, which is where Ofcom’s recent review of the policy comes in.

Ofcom’s review looked specifically at the practice of in-contract price rises linked to inflation and percentage changes. But it’s important to note that general consumer law does NOT prevent companies from increasing their prices during the contract period (i.e. the regulator is limited in how it can respond too).

Nevertheless, the regulator has today said they’re effectively “banning this practice“. The move won’t stop mid-contract hikes completely, but it will require providers to tell customers precisely what any such hikes will be when they sign up (in pounds and pence) and that rules out changes linked to unknown future inflation values or percentages.

The regulator’s review found that consumers have “low awareness and understanding of inflation-linked price rises” and are “unable to estimate reliably what they will pay”. Ofcom also found that people do not typically consider future inflation-linked price rises when choosing a contract. When they do, they often do not understand them fully and find it difficult to estimate what the impact could be on their payments.

Ofcom said more than half (55%) of broadband customers and pay monthly mobile customers (58%) do not know what inflation rates such as CPI and RPI measure. And of those who are with providers that use inflation-linked price rises, very few broadband (16%) and mobile customers (12%) were both aware of the price rise and able to identify that it was inflation-linked with an additional percentage.

We are concerned that inflation-linked price rise terms not only make it hard for people to find the best deal, but also make competition less effective. Further, they require customers to assume the risk and burden of financial uncertainty from inflation, with tangible impacts on their ability to manage costs,” added Ofcom.

NOTE: Ofcom estimates that inflation-linked price rises in spring 2023 increased the amount that customers on these contracts will pay in 2023/24 by, on average, £62 for customers taking landline and broadband from the same provider and between £28 and £69 for pay-monthly mobile customers.

Ofcom’s Changes to Mid-Contract Price Hikes

Wherever telecoms or pay TV providers apply in-contract price rises, they must set these out clearly and up-front, in pounds and pence, when a customer signs up

We are proposing to amend our General Conditions to introduce this rule. Where a telecoms or pay TV company provides for a change to the monthly price of their service during the contract period, they must set that changed price out at the point-of-sale in pounds and pence (the £/p requirement). Providers should also set out when any changes in monthly price will occur. Providers will be required to ensure this information is drawn prominently to customers’ attention before they are bound by the contract.

The £/p requirement would stop providers from including inflation-linked, or percentage-based, price rise terms in new contracts. Providers would be able to increase their prices during the contract period, but any price rises that they write into the contract would need to be set out in pounds and pence, prominently and transparently, at the point-of-sale.

We propose that the requirement would come into effect four months after the publication of our final decision in 2024. This implementation period reflects our concern about the scale of consumer harm that may result from providers continuing to sign customers up to inflation-linked price rise terms, while giving providers sufficient time to make the necessary changes to their processes and business plans.

The change means that, in the future, mobile and broadband providers will be able to present their usual monthly subscription price (e.g. £30 per month), but any price hikes must also be spelled out alongside and include the dates when they become applicable. For example:

Ofcom-Mid-Contract-Price-Rises-Example-Policy-for-2024

The change will be a significant shift for the industry, particularly when we consider that, as of April 2023, four in ten (11 million) broadband customers and over half of mobile customers (36 million) were on contracts subject to inflation-linked price rises. Ofcom estimates that these numbers were due to grow further, to around six in ten of both broadband and mobile customers, as Three UK and Virgin Media begin to apply inflation-linked in-contract price rise terms to more of their customers’ contracts during 2023/24.

Dame Melanie Dawes, Ofcom’s CEO, said:

“At a time when household finances are under serious strain, customers need prices to be crystal clear. But most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.

Our tougher protections would ban this practice once and for all, giving customers the clarity and certainty they need to secure the best deal for their needs and budget.”

Ofcom will now consult on these changes until 13th February 2024, and then plan to publish their final decision in spring 2024. Subject to responses, the regulator intends for the new rule to come into effect 4 months after the publication of our final decision.

This period reflects our concern about the scale of consumer harm balanced against the need to give providers sufficient time to make the necessary changes to their processes and business plans,” added the regulator. Technically, this may come too late to prevent the next set of hikes, but on the other hand, ISPs will now face pressure to act before the next set of hikes in early 2024.

Separately, Ofcom have been investigating whether phone and broadband companies complied with their previous rules between March 2021 and June 2022. “We have found that a small number of providers may not have given some customers clear information about price rises at the right time, creating a potential compliance concern,” said the regulator.

The good news is that they’ve since secured refunds for some affected customers and will continue to “discuss our remaining concerns with these providers, escalating to separate, targeted enforcement action if necessary.”

UPDATE 11:26am

The first ISP to respond today is TalkTalk, which highlights how Ofcom are only changing the rules for the retail side of service provision. But the regulator neglects that ISPs still have to tackle the realities on the wholesale side too, which are often still be linked to inflation.

Tristia Harrison, TalkTalk Group CEO, said:

“For 20 years TalkTalk has focused on delivering value for customers in the vibrantly competitive UK broadband market. If Ofcom is to push ahead with tying industry’s hands on CPI indexed price inflation, we urge them to urgently review similar CPI inflation for BT Openreach at a wholesale level. The link between the two is obvious; is essential for protecting both consumers and competition, and needs addressing.”

TalkTalk has singled out Openreach here as their primary supplier, but it should be said that this issue could also apply to many other network / wholesale suppliers. Openreach are indeed aligned to CPI for inflationary rises, but unlike retail ISPs they don’t do the CPI + X% model (usually they just do a CPI increase) or apply such changes mid-contract. Ofcom’s next review of the wholesale market is due to take place 2026, but we’d be surprised if they changed any of this.

The provider also suggests that less than two thirds of their customers actually received the price increase in 2023, due to things like exemptions for vulnerable customers and some fixed contracts. Despite this, they were still required to pay the increased wholesale cost (they rose by 11.1%) for each connection.

UPDATE 12:04pm

Now we have a comment from Zen Internet too.

Richard Tang, CEO of Zen Internet, said:

“Broadband companies have been tricking customers for years by advertising one price but then hiking the price mid-contract in a way that customers don’t understand. It’s great to see that Ofcom has now taken those companies to task by proposing to ban this unethical practice. Zen fully supports Ofcom’s proposal, as it will provide consumers with much greater clarity and certainty over what they will pay for their broadband services.”

UPDATE 2:06pm

Openreach has responded.

An Openreach spokesperson said:

“Openreach is heavily regulated and our prices came down for more than a decade as demand for broadband and data exploded. More recently though, Ofcom has allowed us to link some of our prices to inflation to give us the headroom to invest in faster, more reliable Full Fibre broadband throughout the UK. That’s something the whole industry agreed needs to happen and it involves more than £15 billion investment in our new network.

As a wholesaler, we’re just one part of the value chain, but we understand that our prices can impact consumers, so we listen to and consult with our wholesale customers at length on our pricing plans. Inflation affects us like any business, but we want to continue investing to make sure the whole of the UK benefits from the better broadband network we’re building.”

UPDATE 13th Dec 2023 @ 11:07am

Hyperoptic has sent in a comment too.

Dana Tobak, Hyperoptic’s Founder & CEO, said:

“This is a great step forward in protecting broadband buyers. At last, the big broadband providers will have to be honest about their pricing, and stop hiding behind small print and acronyms. We called for this change back in November 2022, based on in-depth research which showed just how confusing and misleading inflation-linked price rises are for consumers. We’ve never hit customers with mid-contract price hikes, and we know transparency of cost is vital – especially during the cost-of-living crisis.”

UPDATE 13th Dec 2023 @ 2pm

Rural ISP Quickline has commented too.

Sean Royce, CEO of Quickline, said:

“We wholeheartedly welcome the move by Ofcom to ban unfair mid-contract price rises, in the interests of the consumer.

We have said for a long time now that these hikes are not fair, they are not appropriate and they are not right, more so now than ever before with the cost-of-living crisis, when every penny points.

Consumers need the reassurance that the price they sign up for is the price they will pay, in pounds and pence and for the full duration of their contract.

Earlier this year we reaffirmed our two-year price freeze, removing the fear of cost hikes for our customers at a time when major broadband providers significantly increased their tariffs – many by far more than inflation.

This announcement by Ofcom will go some way to providing that peace of mind.”

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Mark-Jackson
By Mark Jackson
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 and .
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Comments
45 Responses
  1. Avatar photo Rich says:

    Excellent news!

  2. Avatar photo Kris Lord says:

    It’s a welcome change we saying the price will go up by £5 will look less appealing and may drive some change.

    I still think there should be no prices rises. Any telecoms business should be able to manage their finances so that they set today can apply for 24 months.

    1. Avatar photo RightSaidFred says:

      This is it. We’ll see some saying £50 no price changes during contract of 24 months, others saying £47 first 12 months, £56 next 12 months, with people expected to make a decision between short term cost versus overall cost.

      It’d get even messier if they said “starts £47, then goes to £50 01/03/24, and £55 01/04/25” when you contract starts 01/01/24, with people expected to calculate which of the 3 actually is a) the cheapest b) the easiest to plan for.

    2. Avatar photo Matt says:

      May encourage shorter contracts too, though 🙂 as it’ll help them simplify their contract offerings.

      They won’t want to be changing the published pricing every month outside of promos, it’ll be like fortnightly “Black Friday” style deals except instead of 1 price, they’ll have to do this with 2/3 depending on the contract length.

      Should hopefully make it cost-prohibitive to automate and trust vs using your resource for more important work, and simplifying contracts and pricing.

  3. Avatar photo Gary says:

    About time!

  4. Avatar photo Ad47uk says:

    So not stopping the rises, just making it easier to understand, in one way that is a good thing, but I still think that prices should stay the same in a contract. I can understand offers, like £10 for the first 3 months and then normal price after, that is fine.
    it is the half way though and then increase because they feel like it, I have a problem with.
    also, why consult on the changes until 13th February 2024?
    Ofcom is still as useless as the other so called regulators

    1. Avatar photo Alex A says:

      The big difference is that the increases have to be known amounts when the contract is signed rather than linked to inflation. The wording seems set up this way to allow for the half-price for 6 months type offers to remain.

      ISPs are allowed to do +£1.50 from April pricing as shown in the examples but it seems unlikely that many will do that now they are forced by Ofcom and the ASA to be more transparent.

  5. Avatar photo Liam says:

    Will EE and three comply? as this cpi increase is a rip

    1. Avatar photo Dan says:

      They will have to

  6. Avatar photo paddy46 says:

    I think they needed to make this a free exit from contracts. Fundamentally this is just hiding true cost because if it’s 50 pounds one year and 70 pounds the next, the true cost is 60 pounds and they should display that.

    I don’t think there’s any other market that can obfuscate cost like this.

    1. Avatar photo Iain says:

      Insurance is specifically banned from pricing like this, because it’s unfair.

  7. Avatar photo Ben says:

    Will the change be retrospective, or only affect new contracts?

  8. Avatar photo Obi says:

    Very happy with this change from Ofcom. The CPI model had way too much uncertainty, now we can know going into the contract the total contract cost which is really helpful for planning & choosing providers.

  9. Avatar photo tech3475 says:

    Unless I’m misunderstanding something, if the price rise is being stated from the beginning, couldn’t they just average out the cost and sell it as ‘no mid-contract price rises’?

    I mean it’s an improvement of course, but then it’s just one step away from eliminating the issue entirely.

    1. Avatar photo Aled says:

      Unfortunately, it seems clear that the inflation rises are being largely used to hook customers in and gain a few % extra margin for the telco companies.

      If it was one major company doing it, I could perhaps say this is how competition works and let the market decide. Unfortunately it has become popular with the CEOs and sales teams and they have all cottoned on that it is, effectively, a way of cheating the customer out of money using terms that 10-20% of the population will not fully understand.

      Heck, I could even tolerate it if it was linked to actual inflation. But this idea of “4% plus inflation” is really stretching the level of urine that can be taken. Once every company has adopted a misleading policy it is usually when competition regulators start to take notice and you have to go down the legal route.

    2. Avatar photo NE555 says:

      “Unless I’m misunderstanding something, if the price rise is being stated from the beginning, couldn’t they just average out the cost and sell it as ‘no mid-contract price rises’?”

      Of course they could. They’d even benefit by getting a bit more cash up front.

      But it’s about customer behaviour, tending to compare only the headline figures because it’s hard to keep more than one figure in your head.

      ISP1: £25 per month
      ISP2: £23 per month (then £26 per month from 1 April 2024)

      There are many people who’ll pick ISP2 as it’s “the cheapest”, despite paying more overall.

      I’d go further than OFCOM: as well as the price steps, they should show the average monthly cost over the whole contract, including any initial charges.

    3. Avatar photo James™ says:

      @NE555 I would go more on they should say the total cost of the contract
      So sign up January 2024 for 24 months at £23, from April 24 £26, From April 25 £29 so total contract cost being £642 (if my maths correct)

  10. Avatar photo Phil says:

    Given this relates to contracts that include a mobile phone with the price essentially being a hire purchase agreement or loan, then they need to make that clear, its either a fixed rate loan or variable interest rate, so doesn’t change for the duration, or you know it will change in line with interest rates.

    The mobile phone industry has basically hidden the fact we are taking out a loan to pay for the phone and the mobile company also had to borrow the money to buy the phone to give it to us, so as interest rates have gone up, they need to put the price up they charge the customer, but due to the subterfuge, the increases are often more than should be and chalked up to something else.

    I’ve explained this to family and worked out how much their mobile is costing them over 24 months, then taken a SIM only tariff and shown them the price to buy the phone themselves and they can be saving hundreds of pounds, and so if you work out the ‘hidden’ interest rate, its high and people are being fleeced.

    1. Avatar photo tech3475 says:

      It has become more common though to split the airtime and the phone contract, with the former having the increases attached to it.

      The way to work out any contract in my book is to do a spreadsheet comparing the various options, these days using an estimated % increase based on the relatively high figures from this year depending on the provider, then work out the estimated monthly cost and the TCO of the contract.

      In some cases for contracts, the cost was ridiculous for the phone I was looking at, whilst others were fairly minimal in the difference and at least had the advantage of a lower monthly fee even with predicted increases. In the former case my mum was the one who pointed it out thinking ‘that’s a good deal’ until I showed her the spreadsheet, which shock her by how overpriced it was compared to other options at the time.

    2. Avatar photo Mark Smith says:

      For me it’s an absolute disgrace how much they are making from price increases on both air time and on the handset.
      Sure if there is inflation and costs go up, but they increase by CPI + 3.9%!
      How on earth can this be justfied.
      And as far as the loan on the handset is concerned, they dont finance the procurement of the handset on a variable rate. They buy it a fixed price and then sell it ot customer on not just a variable rate but at CPI + 3.9%
      They are basically increasing the cost of an item they sold to you by way above interest rate rises and it’s a depreciating asset.
      Never ever buy a handset from EE or any other operator./

  11. Avatar photo DD says:

    Wow fantastic news. So essentially we will see more offers where it’s “6 months at £x and 18 months at £x” which is so much clearer and means ISPs and mobile providers have to be more transparent. A great result for consumers, I don’t think prices will go up, they’ll still want to be competitive, just cannot apply this unfair policy anymore.

  12. Avatar photo Martyn says:

    Oh dear, how will virmin media ever cope!

    1. Avatar photo AQX says:

      Considering VM only just introduced it this year whereas BT/EE introduced it 2020, I think they’ll be fine.

    2. Avatar photo Matt says:

      @AQX – Depends if they were hoping to fill the coffers with the in-contract-tax.

      Bean counters throughout ISPs will be moving pockets of money around furiously I’m sure 😀

      My concern now is all the ISPs are just going to whinge about the wholesalers, like… broker yourself a better deal if that’s the case? and actually allow for some margin on your costs?

      If your wholesale prices going up more than a couple of % makes your business unviable, then your margins are far too thin. I suspect its more, prices going up makes the shareholder slice get thinner, and that’s the problem.

  13. Avatar photo Matthew Williams says:

    This is good news indeed bit of a shame my 24 month handset contract ends in March though before this is due to come into place as I will be going SIM Only then. But it was a joke how much Mobile and Broadband companies were making off people on something as random as inflation can be and then adding fixed additional to that as nobody including the companies themselves could ever say how much it would be.

  14. Avatar photo John says:

    This is good news but it needs to go all the way and ban ALL increases. If you get a contracted amount, that amount should just not change

  15. Avatar photo John says:

    For me this touches on something fundamental about the nature of a contract between two parties – my understanding is that it’s an official agreement for two parties to promise to continue an agreed course of action for an agreed period of time.

    Neither party gets to make any changes to this agreement, as this undermines the precise reason for creating a contract in the first place.

    For the mobile company’s part, they agree to continue to provide me with an agreed quantity of data, calls, and SMS, using a continuous connection to their network infrastructure. It also includes the hire-purchase of a handset.

    It is unacceptable for them to decide they will reduce the amount of data/calls/sms I receive, or my ability to connect to their network.

    My part of the contract is agreeing to pay a certain amount of money each month. I’m promising that I will continue to do so as long as the terms of the contract states.

    Now, in the same way that my personal circumstances may very well change during this contract period, I could lose my job, I could become sick or injured and prevented from working. I am still expected and liable for the monthly amount as agreed in my contract.

    So why do mobile company’s get to have a clause which allows them to make increases to only my side of the agreement due to changes in their personal financial situation.

    It is a clear demonstration of the imbalance of power within the contract, and for me totally undermines the very point of a contract.

  16. Avatar photo Ben says:

    It’s good news, although a complete ban on rises would be better. However OFCOM deserve no praise – they have singularly failed to act on this for years. OFCOM have two principal duties under law:

    * Furthering the interests of citizens in relation to communications matters, and
    * Furthering the interests of consumers in relevant markets, where appropriate,
    by promoting competition.

    The competitive market has largely failed, as companies have copied each other by imposing mid-contract price rises. OFCOM should have stepped in long ago to fix the issue, but again have not.

  17. Avatar photo Alex says:

    TalkTalk have some nerve, you’ve got to admire their complete hypocrisy.

  18. Avatar photo Fibre Scriber says:

    Good to hear the proposed end of the grossly unfair CPI/RPI + 3.9%. I’m afraid the expected timescale will only give the Broadband companies about another 9 months to come up with some Baldrickesque crafty plan, to continue to pull the wool over their customers eyes, regarding the price they pay for their Broadband contracts going forward, or am i just being too cynical?

  19. Avatar photo Jimbob says:

    What a total waste of time. ISPs won’t be making any less money and consumers will feel like everything’s become much more expensive. The only good thing is that people that didn’t understand inflation linked price increases can no longer act shocked when their bill goes up.

    ISPs still have to be prepared for increased costs. Instead of £20/month + 2x inflation linked increases (assuming 15% for easy maths); £20 becomes £23, then becomes £26.45 – they will just advertise as those figures.

    £20 for now, then £23 from X date, then £26.45 from X date.

    Whereas inflation linked increases might’ve been cheaper than 15% before, they’re now set at those higher prices. And you’ve agreed to them, with Ofcom forcing the figure to be prominent – you’ve got no argument to push back with!

    As someone who works within a major ISP, this is something that will get an eye roll and a workaround within a few weeks. It’ll even get launched ahead of Ofcom’s final decision for good PR – look what we’re doing because it’s right for the customer!!

    1. Avatar photo Mystic Mike says:

      At least as a consumer I will know what the price rises are going to be, at the moment they’re entirely incalculable because they rely on me having Mystic Meg powers of predicting the level of CPI/RPI in 12 or 24 months time. And if we were all that clever we would be making a fortune on the financial markets, not arguing with our ISP over x% price rises.

      And telcos wonder why people hate them, they’re commodotised, and nobody has any brand loyalty. It’s this sort of nonsense that is why.

    2. Avatar photo Sam says:

      The high horse is unbelievable. You honestly believe a 15% higher price tag will make people sign up for your “major” isp at the same rate. It will not because now everyone will clearly see how much more expensive you are. Keep rolling your eyes while your customer numbers will fall, your days of milking people are over

  20. Avatar photo Jack says:

    I expect Sky to fight this. The TV aspect will be a bigger issue for them

    1. Avatar photo Mystic Mike says:

      Sky is one of the few of the big providers who don’t do RPI/CPI linked price rises.

    2. Avatar photo CJ says:

      Sky may not do RPI/CPI-linked increases but their contract for TV service allows them to increase the price once every 12 month by up to 10%.

      I also expect Sky will take legal action to try to stop this or to have their TV service removed from its scope.

    3. Avatar photo Ben says:

      I don’t think Sky will have an issue – they’ll just need to make sure their website shows the 10% increase in pounds and pence rather than just as a percentage.

  21. Avatar photo Mike says:

    Superb to hear this!

    Effectively fixed price contracts … as long as one does the very simple calculation…
    (Sum of all monthly costs – Initial Incentive (ie “Bung”) ) / length of contract.

    Hope the system will also demand that ANY changes to the pre-scheduled contract payments
    releases customer from their obligations

  22. Avatar photo Jim says:

    Mark, I am not sure you have looked at ofcoms market review for setting Openreachs charges if you have you would have seen that many if not all are CPI +/- x which allows Openreach to increase the price every April, how are retail supposed to handle this? I suspect we may just see many set it at 10%.

  23. Avatar photo Rik says:

    Great news. An already expensive phone plan I took out in August 2022 shot up by over a tenner a month in March this year due to the unexpected high inflation rate. Fortunately for me, my provider was slapped down for procedural failures when I took out the contract so I got to cancel without charge and keep my phone.

    Setting prices at the start of the contract is much better for the consumer however, I still think it stinks. If you buy a car on finance, the monthly price is fixed for the duration.

  24. Avatar photo AndyK says:

    Excellent news. It’s obvious that inflation linked price rises on 1-3 year contracts are unfair on the consumer and just profiteering by ISPs, who frequently ramp up existing customer prices whilst not charging new customers any more.
    It is even more ridiculously unfair that some providers actually offered deals where the customer may never actually pay the advertised price – O2 for example will happily sign up a customer in March and then immediately apply an inflation linked increase to the tariff on the first bill in April – a simply unacceptable practice.
    What I’d really like to see is Ofcom go a bit further and say that price rises should only be allowed to take effect on specific contract anniversaries, I.e. 12 months in, not on an arbitrary date of the providers choosing.

  25. Avatar photo innocent bystander says:

    I’m pleased about this, some broadband providers are sneaky and it will force them to be obvious up front about what they are actually charging you. When you sign up you get a contract price of say £20 and it goes up to say £100 out of contract in 2 years time. Fair enough you think, I’ll just renew and only be paying £20 again in 2 years. But what they don’t tell you is that you are actually paying £100 with a £80 discount applied for 2 years.

    So what happens when CPI+3.9% time comes round in April? Say 15%. Do you think they apply that to the £20 you are actually paying leaving you paying £23???

    No they apply it to the undidscounted price and then deduct the original discount with no CPI+ increase to that, i.e. £100 plus 15% = £115 – £80 discount. So you end up paying £35 after the increase, an actual increase of 75%. You can work out for yourself what happens if you contracted mid-year and you get hit with the year 2 increase, it isn’t pretty!

    Ok that’s a bit of an extreme example, but it could be done in just that way, and I suspect probably is by various providers but not so excessively. The discount only being 50% so the cpi+3.9% increase “only” being doubled up.

    1. Avatar photo Peter says:

      That’s how Sky and Virgin do it

  26. Avatar photo David H says:

    Sounds good, but Ofcom is toothless when it comes to enforcing its “recommendations”. It made similar noises a while ago about sims being sold with unlimited data when in fact some vendors (EE, O2) severely throttle speeds when an arbitrary limit (usually buried deep in the Ts and Cs) is reached. In EE’s case, it leads to a ludicrous situation where it offers sims with 500GB of data per month and supposedly unlimited sims with just 100GB extra. Ofcom’s net neutrality regulations are similarly flouted, with O2 actually forbidding the use of its phone sims in a dongle or modem. The mobile phone industry is a sector-wide booby-trap for even the most wary purchaser and Ofcom has done little or nothing to rein it in. Don’t hold your breath for this one.

  27. Avatar photo Buggerlugz says:

    So Virgin media have no impetus to change anything about this because they’re already baked it into their contracts thus making themselves immune to OFCOM changing the rules.

    Just when you think things could improve for consumers they use underhanded corporate legaleaze to undercut customers yet again!

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