Broadband ISP TalkTalk Adopt New UK Policy on Annual Price Hikes
Budget conscious broadband ISP TalkTalk has informed ISPreview that they’re preparing to follow Ofcom’s new guidance on inflation-linked annual broadband price rises. In practice, this means that new and re-contracting (upgrading) customers will be hit by a flat annual price increase of £3 (monthly) each April.
As above, the new policy is designed to reflect the regulator’s recent move to BAN broadband ISPs and mobile operators from doing mid-contract price hikes that are linked to confusing inflation and percentage-based changes (here). BT, Plusnet, EE and Vodafone have already adopted an identical approach to the one that TalkTalk are about to introduce (details below)
However, Ofcom’s change was never designed to stop mid-contract hikes completely (it’s more about making future pricing clearer and simpler), but it did require providers to tell customers precisely what any future price increases would be when they sign-up (“in pounds and pence“). This rules out changes to core subscription prices that are linked to unknown future inflation values or percentages.
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From 12th August 2024, customers joining or re-contracting with TalkTalk will now see the monthly amount they pay for their broadband increase by £3 annually in April each year. Customers who joined TalkTalk before 12th August 2024 will continue to see the price of their broadband contract increase by CPI, plus 3.7% in April (this applies to in-contract and out-of-contract customers).
But the provider does note that their financially vulnerable customers will continue to be excluded from the annual broadband price rise. TalkTalk claims that almost a quarter of their customers did not receive a mid-contract broadband price increase this year due to exemptions, even though the provider’s own wholesale costs did increase.
Susie Buckridge, TalkTalk CEO, told ISPreview:
“For more than 20 years TalkTalk has focused on delivering value for customers. We remain fully committed to providing great value broadband and ensuring our customers have a clear understanding of the price they will pay throughout their contract.
We will be moving away from an inflation-linked annual broadband price rise to a flat increase following Ofcom’s new guidance. We believe this will help improve transparency and consumer understanding of the change.”
The concern for consumers is that this approach does have its flaws, such as with the fact that it may make some cheaper packages more expensive than they would have been under the old system (particularly now that CPI inflation has returned to a more normal level). The fact that providers can also specify a specific rise ahead of time will also do little to dampen calls for an outright ban on mid-contract hikes in favour of fixed term pricing – something we’d support.
At this point it’s worth remembering that not all providers adopt the same approach as the biggest players and many smaller ISPs, particularly newer alternative networks (altnets), often promote packages with simple fixed price terms. We should also point out that Ofcom won’t formally begin to enforce this change on the market until 17th January 2025 and TalkTalk are working toward full compliance by then too.
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The new policy is typically only focused upon the core subscription price of a package, thus call charges and any paid add-ons may adopt a different approach.
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.
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An unintended side effect of OFCOM’s policy. If it’s a flat £3 increase (sorry mark couldn’t read the whole page because of ads), it hurts subscribers more if they’re on cheaper tariffs. Sometimes I’m happy with CPI + 3% because it turns out to be £1 more.
Sky were ahead of the game, penalty free cancellation if they did a mid-contract increase.
There shouldn’t be mid contract price hikes full stop. The price should be averaged out for its entire length or they should be giving shorter contracts to be renegotiated every 12 months. Just another case of Ofcom being asleep at the wheel.
@BD yup
Mark – given your influence in the industry would you consider raising this as an issue with oth Lisa Nandy in her ministerial role and Ofcom as the consequence of the latter’s interference has been to raise overall costs to consumers unless there is a provision in all contracts for consumers to cancel in the event of price rises.
Labour have previously expressed that the issue of mid-contract price hikes is something they will move to tackle, but we might yet have to wait a little while before they get around to that. In any case, I suspect that may want to see what happens with Ofcom’s changes first.
I think it’s important to bear in mind that Ofcom haven’t made this worse. If the various providers wanted to maintain a consistent “CPI + 4%” (ish!) policy then they could increase prices by 6%. This doesn’t satisfy the “pounds and pence” requirement in itself, but it would be easy for the providers to calculate what 6% is on their package(s) and display that.
Providers are using this as an excuse to increase prices by stealth, and customers should punish them appropriately by choosing providers who don’t implement annual price increases.
How do you ban all mid-contract increases without also banning 6 months half price, first 3 months free etc.?
The important next step is for Ofcom and the ASA to make clear that once the rules become binding, they will not accept adverts or contract documentation that gives undue prominence to a headline price that doesn’t apply for the full contract term.
Ofcom’s new rules on giving price change information are clear:
Core Subscription Price Change Information means, if the Core Subscription Price is to change during the Commitment Period: (a) the changed Core Subscription Price(s), expressed in pounds and pence or units of different currency; and (b) the date from which any changed Core Subscription Prices referred to in (a) shall have effect
Section 1.27 of the accompanying guidance is also clear:
It would not be sufficient for providers to simply state the change in the Core Subscription Price, nor would it be sufficient to state a broader timeframe for when the price rise will occur, e.g. “Your monthly price will increase by £3 each March until the end of your contract”.
Most of the adverts I’ve seen so far take the latter approach, itemising the annual increase separately. They will have to stop doing this by 17 January 2025.
When this is properly enforced, I expect that adverts with an annual increase will slowly die off because they’ll look ridiculous. The main benefit of annual increases, which is to hide the true cost in the small print to make the headline price lower, will have gone.
On a £16.95 ADSL line that is almost 20% and can come in only a month or two after signing a contract sometimes. I suppose at least they are 12months on ADSL not 24. Still very confusing though. Just work out the frickin price divide it by 12/24 and give us an actual monthly price for, you know, each month.
I don’t see the justification for mid contract prices. A fixed term contract should be that – fixed price and fixed duration. If an ISP wants to increase the cost mid contract then in all fairness, a consumer should be allowed to cancel their subscription. This current arrangement is very one sided in favour of the ISP. The regulator is very much on the side of the suppliers allowing this practice.
A lot of people commenting about how £3 per month is 20% increase on cheapest tariff need to be mindful the £3 increase is ONLY for those contracting/recontracting after 12th August as Mark noted in the article.
Anyone still on the cheapest tariff will still be under the old RPI+3% increases and would most likely be out of contract.
With my current provider my increase this year for BB/TV and unused phoneline was a £30 increase per month as they had also added discounts that ran out at same time contract renewal was due. Give them their dues I recontracted a much better price and they then discounted my 1st payment to make the last payment (belatedly out of contract) match the new contract price.
UK consumers shouldn’t NEED to recontract/haggle at the end of a contract, never mind in the middle of it, to stop price rises. I still don’t accept that any company needs to up the prices at the end of the term…. the product itself doesn’t change, and neither usually does the service level. Ultimately the reward for your time/money is increased pricing.
All it does is force consumers to switch on month 13/19/25 and with One Touch Switch due this year the process helps, but it helps manage a symptom of business treatment of customers as opposed to resolving the issue in the first place.
while I can accept the hatred for mid contract rises (though I think defined rises are better than woolly RPI plus 3.9% nonsense), I don’t agree that people shouldn’t have to act at the end of the contract.
Ofcom already hand-holds the customer by requiring telcos to notify customers that their contract has ended, what the non-contract price is, what deals they might be eligible for, and to remind them that better offers may be available with other suppliers. If the customer doesn’t act on that information, even if only to agree to a new contract at a lower price, then that’s on them.
We apparently wanted rampant competition and a free market. This is how it works.
It’s pretty much guaranteed now all the big ISP well adopt the £3 increase in April each year now
Why can TalkTalk (or any provider) not simply work out the average cost and then advertise the same amount over the contract length? Is it because they would like to use the smoke and mirror approach and have a lower initial cost as the headline, with the 2x April increases of £3 + £3 hidden in the small print? It’s totally disingenuous. Ofcom has failed spectacularly.
You nailed it. It’s all about misleadingly headlining lower prices.
One thing to also note, it’s April no matter what time of the year you initially subscribe.
I know that’s the new financial year, but it feels like they’re taking the mick e.g. if they have a Christmas sale.
Typical Ofcom making things worse, they should have blocked mid-contract price rises full stop and made ISP’s factor the costs into the monthly payment for the whole contract length, then that would allow fair competition.
Instead ISP’s are now setting blanket £ increases which the majority of the time are even larger than what the old formula would have increased payments by.
Ofcom – another unelected useless quango costing money.
All Ofcom needed to do was make it so in contract rises are banned, so if an ISP wanted to do annual price rises then they simply stick to 12 month or shorter contracts, its basic common sense, they must have been lobbied and then succumbed either via corruption or threats that were made which had them running scared.
Many broadband contracts now days are one sided contracts where the ISP can increases prices, change t&c etc. mid contract but the consumer is locked in, and has to pay for leaving early.
Many ISPs have proven that “mid contract” price rises are not needed to thrive, ISPs like Virgin Media and others are just purely greedy
When my current £35 a month expires, the new contract price will be… £35
What I don’t understand is why ‘But the provider does note that their financially vulnerable customers will continue to be excluded from the annual broadband price rise.’ As I understand it they receive a cost of living top up every month from DWP to cover the cost of things like this
It should be stopped all together. Its just greed.
If i take a 24 month contract. £35 per month.
It goes to £38 then £42 over 2 years. Meanwhile the £35 for 24 months is still active on their website. So after 2 years i re contract back at £35. Rinse and repeat.
Just take your new contract out in May, that way you only have to take the second price rise for a month. Then just sign up for a new contract, usually at the price you originally paid.
Typical incompetent OFCOM. £3 a month is actually £36 a year. With inflation now down to 2%, that’s actually bloody outrageous!