Ofcom Express Disappointment over O2’s UK Mobile Price Hike, But Doesn’t Act UPDATE
The UK telecoms regulator, Ofcom, has today said they’re “disappointed” by mobile operator O2’s (Virgin Media) recent decision (here) to increase their annual mid-contract price rises beyond what customers agreed when they signed-up (often above inflation too) and then forcing that upon existing customers. But so far an expression of disappointment is all they’ll do.
Just for some context. At the start of 2025 Ofcom began requiring UK telecoms providers to adopt a new approach to mid-contract price hikes, which did away with the old percentage and inflation-based model – replacing it with one that must now set out such price rises “clearly and up-front, in pounds and pence, when a customer signs up” (here). This made annual price hikes clearer and more transparent, but not necessarily cheaper.
In response, many broadband and mobile providers introduced flat annual price increases. For example, O2 originally said they’d increase mid-contract prices by £1.80 (monthly) every April for Pay Monthly (airtime) customers, but this suddenly changed last week after they increased the level of annual hikes from £1.80 to £2.50. On top of that, they also applied this to existing customers, albeit while giving them the option of a penalty free contract exit.
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The move actually isn’t the first example of such a mid-flight pricing policy change, with both Virgin Media (here) and the BT Group providers (inc. EE and Plusnet) recently doing something similar for broadband (here). But for some reason, Ofcom’s response today only seems to single out O2’s change, and they completely fail to address the fact that the policies being adopted by most providers unfairly penalise those on cheaper packages (the same increase is applied, regardless of how much your monthly package costs).
Ofcom’s Statement
We want customers to have certainty about their monthly mobile bills so they can plan their household budgets. That’s why earlier this year we banned unpredictable price rises linked to inflation and instead required providers to tell customers upfront in pounds and pence about any increases in their contract.
We are disappointed by O2’s decision. This goes against the spirit of our rules which are designed to ensure greater certainty and transparency for customers when they sign up.
Today, we’ve written to the major mobile companies reminding them of their obligations to treat customers fairly. We encourage any customer who wants to avoid these price rises to exercise their right to exit without penalty and sign up to a new deal, following our five top tips:
- Know your rights. Your provider must give 30 days’ notice and let you exit your contract penalty free if they increase prices beyond what you agreed when you signed up. That means you’re free to sign up to a new deal – either with your existing provider or with a new one.
- Shop around. Use a price comparison site to check out the best alternative deals on offer.
- Text to switch. You can switch to new mobile provider by sending a simple text message. Just text ‘INFO’ to 85075 for free to get the ball rolling and follow the easy instructions.
- Consider a social tariff. These are cheaper packages for people claiming Universal Credit, Pension Credit or other benefits. They’re delivered in the same way as normal packages, and the price won’t go up mid-contract.
- Use Ofcom’s ‘Map your Mobile’ tool. Head to Ofcom’s ‘Map Your Mobile’ tool, put in your postcode and instantly find out which provider offers the best coverage in your area.”
Naturally, the network operators would argue that they have to increase prices each year due to costs rising in other areas, such as service provision, regulation, energy and the need to invest in new network upgrades. At the same time, the level of inflation has remained much higher than it was previously forecast to be, which changes the risk and cost assessment that each provider has to make.
As usual it’s worth remembering that not all providers play the mid-contract price hikes game and quite a few smaller players do still offer fixed price terms. But for now, Ofcom can only express being “disappointed” and seems unwilling to take any firmer action, which is itself a disappointment to consumers. The calls for mid-contract hikes to be banned will no doubt continue to grow, although doing so without wrecking the flexibility to offer competitive discounts would be tricky.
UPDATE 2:05pm
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We’ve had a response from O2.
An O2 spokesperson said:
“As acknowledged by Ofcom in its letter to providers, its rules do not prevent companies from increasing annual price changes – for example, to invest in improving networks. The changes we have announced in no way breach any regulatory rules.
We appreciate that price changes are never welcome, but demand for mobile connectivity is greater than ever, and any price change customers see on their bills is greatly outweighed by the £700m we invest each year into our mobile network to meet this growing demand. We have written directly to customers about this change, and they are able to exit without penalty if they wish.”
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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Time to get rid of this unelected quango and get something that works properly…
You’d just be changing the name on the building. The past and present governments have made Ofcom so vital that you can’t simply get rid of it without causing a bigger problem, and even if you did, you’d end up just rebuilding the same thing to solve the same problems, as well as the new ones you’d just created. The problem isn’t Ofcom, the direction for change needs to come from the government.
And your new organisation would be similarly staffed with experts in telecoms regulation. Guess where they would come from?
Ofcom’s rules already allow customers to leave contracts without penalty in these circumstances. Their job is to ensure fair play in the marketplace. If companies go to market with an offer that’s unattractive it’s upto the market to punish them, not Ofcom.
Too much control gets us an economy like the former soviet states ‘enjoyed’. Companies must be free to make offers to the market, consumers must be free to choose them or not.
@ 125us:
Ofcom are not necessarily experts in what they do. Policy is also set by political appointees. Take a look at the CV of the current Minister for instance.
In regard to the BT Group companies “recently doing the exact same for broadband”, the changes to their policy applied only to new customers and those renewing after the change of date (as acknowledged within the piece).
This differs considerably from O2’s decision to apply their policy also to existing customers within their minimum term – there’s a false equivalence there.
Exactly this. Article is mis-leading.
I’m one of the people who are leaving O2 today because of this increase year upon year it’s plain wrong,
at the start I only wanted a 30 day rolling contract for a £10 sim with O2 then when I called them about something or other I got pushed into a 2 year deal yes I was told it would go up by £1.80 every year ok but as pointed out here last week got the email to say it will be going up by £2.50 a month from next April with the option to leave without penalty, I have done just that and gone with Lebara why doesn’t Ofcom put their foot down on these companys???
Good for you. We don’t have many options with companies these days, but voting with our feet is one of the best available.
The Ofcom message of ‘you’re free to sign up to a new deal – either with your existing provider….’ – yes – and just wait for it to happen again? This behaviour should not be rewarded with custom.
Same here, voting with my feet, moving to Mozillion: less data, fixed price, better network.
I just got an suepr excellent deal last month. I was paying 9.80 for 40 GB of data. I used the HotUKDeals script upgrade browser upgrade edit and got a deal for 50 GB for £6.50 with the 2-pound discount code for 12 months. In April, my bill will be £9.00. After the discount, the Sept 2026 bill goes up to £11.00, and it comes to £11.00 in April 2027. £13.50 I just ordered the 10 GB Mozillion for £6.50 no more messing about putting up my monthly bills.
There’s so much choice out there for sim only with the MVNOs with 1 month rolling contracts I can’t see much point in signing up for a 2 year stint now.
“I’m one of the people who are leaving O2 today because of this increase year upon year it’s plain wrong,”
Inflating is now running at nearly 4pc per annum. The fact that inflation is not zero should make it abundantly clear that retail prices will continue to rise each year.
On top of that, services inflation in the UK is higher than CPI. On top of that, this government is continuing to impose more costs on businesses through legislation, much of which undermines productivity.
So, in short, no one can be complaining about price increases without suggesting that they are disconnected from what is going on around them.
Inflating is now running at nearly 4pc per annum. The fact that inflation is not zero should make it abundantly clear that retail prices will continue to rise each year.
On top of that, services inflation in the UK is higher than CPI. On top of that, this government is continuing to impose more costs on businesses through legislation, much of which undermines productivity.
So, in short, no one can be complaining about price increases without suggesting that they are disconnected from what is going on around them.
When a contract isn’t a contract. It baffles me, how telecommunications contracts have always been, and continue to be, the shoddiest and shadiest practices around. A regulator that does nothing; is it any wonder?
No doubt there will be something in the small print of the contract that let’s them get away with it. Personally VMO2 is a company I’ve never had dealings with & probably never will.
It does boggle my mind that you can have an agreed pricing contract, that is just ignored and changed, “with the option to exit”
That does seem to be a weasel way out of a contract, and presumably they think enough people will just stay and they’ll inch a few extra percent of profit for their shareholders again
I’m one of those sticklers for principles. If we agree a price, and you change it, cause as much time wasting and complaints as possible, ask for the complaints to be included in their ISO9001 complaints register and if that doesn’t work, just leave and never come back
I never went back to Virgin when they started playing silly games, overselling and throttling networks in student areas
Am I missing something? why not just move to a different company that doesn’t have midcontract increases or do O2 offer something special to warrant these increases.
If you’re with Virgin Media you can get a speed boost on lower packages by having an O2 sim.
However I suspect that for most people it will come down to things like brand recognotion, trusting the network (yes there are people who swear by O2’s network), having their phone contract through them, not knowing what NVMOs are, can’t be bothered researching, high street presence, etc.
I’ve been with O2 for years now, as they still have free roaming in Europe and support Apple Watch plans (good for emergencies). I’ve looked at other networks and they didn’t provide the same package at the same price point.
That said, the fixed price increases are a killer on cheap contracts, I’m thinking its time to give up the Apple Watch plan and free roaming which allows me to look elsewhere
Careful, boys, you’ll get wagging fingers next.
What hacks me off is that OFCOM dropped the ball here. They were trying to protect consumers from unexpected price rises but by dictating that providers must quote increases in pounds and pence, many providers took advantage of this.
For example. If you’re on a SIM only deal at £20 a month vs a contract at £80 a month.. If inflation and CPI was 5%, the £20 a month contract would go up to £21 a month. The £80 contract would go up to £84 a month. Both users face the same rise, but those on the cheaper contract have a lower rise.
Under the new rules, a provider may advertise an annual increase of £4. The £20 a month customer is now worse off as their bill would now go up to £24 a month, a rise of 20%, whereas the £80 a month customer would still only go up to £84 a month, the same old 5% rise. Basically, this means that those on lower price contracts are increasing the profits of the providers who are simultaneously able to use this as a way to erode away the lower priced contracts.
A fairer system would have been for OFCOM to advise providers they can only up their prices by £x a month, up to a maximum of 5% of the current contract price as that would have kept prices a little lower for those on lower price contracts who are more likely to struggle with annual price increases.
Do the rules state that they must have a single rate across all their packages? Or are the companies taking advantage of the change as a way to justify higher price increases?
i.e. Could they have a fixed 5% (not advertised) and tell us the pounds/pence for each individual package
The policy is not designed to protect consumers from unexpected price rises; it is to help those who cannot work out percentages.
The policy is not designed to protect consumers from unexpected price rises, it is to help those who cannot work out percentages.
Myself and my wife left O2 this afternoon. Yes all contracts go up but O2 are extracting the urine. Up £2.50 on a £8 a month contract. All the best.
O2 is not bothered about losing lower margin contracts.
“…to invest in improving networks…” joke of the day by O2. I am waiting for Revolut to present their offer and I will decide what to do next. What I care about most is EU roaming and relatively cheap international calls.
There was me thinking that investment was made by the company, not the mid-contract customer.
I obtain my PAC code and requested move to Mozillion this afternoon….
I’m done with the price increases hate playing the silly game each year my plan was only £8.50…….
I rather settle with another provider without any contract commitment and price increases every penny counts £30 a year is bang out of order that £30 covers around 4 months bills with my new provider O2 shot themselves on this one with greed.
Best way of protesting about this decision is with your wallet. Both my wife and I cancelled both our O2 contracts (only 4 months in) and moved to Lebara.
What was particularly satisfying though was that we bought new S25 phones direct from Samsung and were offered a heavily discounted cost for purchasing an O2 SIM at the same time. Because we bought via Samsung there was no separate device plan, just a single cost for airtime that included the phone.
Couldn’t request a PAC via text or via the website as it kept asking both of us to call and when I spoke to an agent he said you’ve got a hell of a deal as he confirmed no early termination charges and could keep the phone.
Does make me wonder how many people aren’t aware of their right to cancel or can’t be bothered (like I say texting for a PAC or trying to go via the O2 website didn’t work so wonder if that is deliberate?
Farewell O2 and hello Lebara, £17 a month reduction on both our plans (and as I say superb saving on 4 month old S25 phones each!)
So OFCOM find themselves in a position they aren’t willing or able to do anything to stop a price hike by a UK company that is going against agreements for such price hikes, a UK company that falls under their umbrella. However, OFCOM seem quite happy spending money trying to fine companies outside of the UKs jurisdiction because they don’t comply with the latest government censorship rules.
If this isn’t evidence that the OFCOM is just a cover for the UK government to control communication networks and the mainstream media, rather than it be there as advertised to protect consumers against monopolistic practices or unfair terms and conditions, I don’t know what is.
No, it’s not evidence of that at all.
Consumers are protected. They can leave their O2 contracts without penalty.
Call them by their proper name – Telefonica.
They are in trouble, and just like the Spanish owned UK airports, using British consumers to bail out their home businesss
I do not understand the controversy, let alone the thinking behind Ofcom’s policy on price rises.
“… earlier this year we banned unpredictable price rises linked to inflation and instead required providers to tell customers upfront in pounds and pence about any increases in their contract. ”
This just exposes the absence of a basic understanding of how economies work. It is especially lacking in an understanding of the consequences of government-imposed legislation in addition to natural price increases.
It just smacks of 1970s socialist price regulation.
People may choose to leave O2, but cost increases will also be passed on to MVNOs on the VMO2 networks. So you can run, but you can not hide.
I left O2 for one of their MVNOs because of this. At least I get an fixed price contract for the next 12 months, and it works out cheaper than O2 was going to charge me.
If my MVNO raises prices in 12 months, I’ll shop around again. It’s all I can do, and it sure is better than staying with O2 and taking the price rise on the chin. My pay didn’t go up by 12%, so I’m not accepting a 12% rise in my contracted price. I was glad they gave me the option to leave penalty free.
@Spurple:
O2 is not increasing its prices more frequently than once every 12 months, so there is no difference between it and the MVNO in that respect.
If you are happy with what you get from the discount operator, then that is fine, but the MVNO does not offer the same service as O2.
Further, there is nothing preventing the MVNO from having to raise its prices by similar rates if its payments to O2 are increased.
UK consumers should be prepared for sizable price increases in the coming years.
As zombie firms fold, and the inclination to subsidise new entrants with unsustainable debt, prices will rise to more normal, sustainable levels.
£700 million on improvements?
More like in diesel costs – there are several new 5G masts near me that are running off huge generators 24/7 and have been for many months (over a year in one case).
How is that sensible? Hiring the genny and paying for diesel to be delivered there week in/week out. Unbelievable. Also, what climate emergency??