{"id":38774,"date":"2025-01-16T00:01:59","date_gmt":"2025-01-16T00:01:59","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=38774"},"modified":"2025-01-10T09:06:56","modified_gmt":"2025-01-10T09:06:56","slug":"ofcom-enforce-ban-on-some-mid-contract-uk-broadband-price-hikes","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2025\/01\/ofcom-enforce-ban-on-some-mid-contract-uk-broadband-price-hikes.html","title":{"rendered":"Ofcom Enforce BAN on Some Mid-Contract UK Broadband Price Hikes"},"content":{"rendered":"

Ofcom<\/a> will tomorrow begin enforcing a new rule that bans UK phone, mobile, pay TV and broadband providers from doing mid-contract price hikes that are linked to inflation (CPI or RPI) and percentage-based changes. The change will make pricing clearer for new customers, but some consumers could still pay more than under the old model.<\/p>\n

Just to recap. Until recently most of the major providers, and some smaller players, had adopted a policy of increasing their prices each year by nearly 4% plus the rate of annual inflation (CPI or RPI) \u2013 as published in a particular month (usually January or February). But this approach became a problem during the recent inflation surge, which in 2022 saw prices rise by around 9% (here<\/a>), then over 14% in 2023 (here<\/a>), before dropping back to around 7-8% (here<\/a>) in 2024.<\/p>\n

NOTE:<\/strong> Back in April 2023 some 11 million broadband users and 36 million mobile customers were on contracts subject to inflation-linked price rises.<\/div>\n

The policy also made it harder for customers to exit their contracts penalty free because the providers could argue that they\u2019d already given prior notice of the increases in the small print. On top of that, many consumers found the policy confusing (i.e. not everybody is familiar with how \u201cinflation<\/em>\u201d actually works or the meaning of terms like CPI or RPI).<\/p>\n

On the other hand, with inflation having fallen back sharply, the practical cost impact on consumers under the inflation-link approach is now much less of a concern. Nevertheless, the earlier situation did eventually prompt Ofcom<\/a> into proposing a new industry-wide approach, which will finally be introduced tomorrow.<\/p>\n

The New Policy on Mid-Contract Price Hikes<\/strong><\/span><\/h3>\n

Under the change, providers doing in-contract price rises must now \u201cset these out clearly and up-front, in pounds and pence, when a customer signs up<\/em>\u201c. Put another way, providers would be able to present their monthly subscription price (e.g. \u00a330 per month), but any mid-contract price hikes must be spelled out alongside and include the dates when they will become applicable.<\/p>\n

“Providers must draw this information to the customer\u2019s attention prominently before they are bound by the contract, in a clear and comprehensible manner (including during a sales call or other verbal sale such as an in-store sale) to enable them to make an informed choice. Providers must also set out when any changes to the monthly price will occur<\/em>,” said Ofcom<\/a>’s statement.<\/p>\n

\"Ofcom-Mid-Contract-Price-Rises-Example-Policy-for-2024\"<\/p>\n

In short, this change is more about making package pricing clearer, not cheaper, for new customers. Existing customers will still remain subject to their old contract terms, unless or until they switch to a different provider or re-contract their current package. The policy also only applies to the core subscription price and not optional add-ons, out of bundle charges or call prices. Suffice to say, there’s still plenty of scope for consumer confusion.<\/p>\n

The new approach naturally increases the risk for providers that previously adopted the CPI\/RPI + 3-4% model for annual hikes, especially those that offer longer contract terms. The provider thus have to balance that greater risk through their pricing (i.e. bigger price increases may be introduced to compensate for greater uncertainty). In some cases, this may even make packages more expensive than the old approach.<\/p>\n

For example, the BT<\/a> Group providers (e.g. BT<\/a>, Plusnet<\/a> and EE<\/a>) and Vodafone<\/a> were the first to respond by introducing a flat \u00a33 per year increase on broadband and a c.\u00a31-\u00a32 increase on mobile. Such a policy is clearer, but it doesn’t scale well across differently priced packages (i.e. those on entry-level services may be hit harder) and is unlikely to dampen consumer calls for an outright ban on mid-contract hikes \u2013 something we\u2019d support.<\/p>\n

Speaking of which, if service providers can now predict their increases ahead of time, then it arguably increases the case for simply baking those planned hikes into a fixed contract price. But at this point it\u2019s worth remembering that not all providers adopt the same approach and many smaller ISPs, particularly newer alternative networks (altnets), often already promote packages with simple fixed price terms.<\/p>\n

Suffice to say that if Ofcom perceives that the new approach is being abused or failing to deliver fairness in actual pricing, then we may well be back here again in the future, with the regulator perhaps proposing a complete ban on mid-contract price hikes. But doing that would be more contentious and might invite a complex challenge from the biggest providers, even if fixed pricing is something that a lot of smaller players have been doing for years.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ofcom will tomorrow begin enforcing a new rule that bans UK phone, mobile, pay TV and broadband providers from doing mid-contract price hikes that are linked to inflation (CPI or RPI) and percentage-based changes. The change will make pricing clearer for new customers, but some consumers could still pay more than under the old model.<\/p>\n","protected":false},"author":1,"featured_media":31957,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[99,36,38],"class_list":["post-38774","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-asa","tag-ofcom-regulation","tag-politics"],"share_on_mastodon":{"url":"https:\/\/mastodon.social\/@ispreview\/113835103525799968","error":""},"yoast_head":"\nOfcom Enforce BAN on Some Mid-Contract UK Broadband Price Hikes - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Ofcom will tomorrow begin enforcing a new rule that bans UK phone, mobile, pay TV and broadband providers from doing mid-contract price hikes that are\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2025\/01\/ofcom-enforce-ban-on-some-mid-contract-uk-broadband-price-hikes.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ofcom Enforce BAN on Some Mid-Contract UK Broadband Price Hikes - 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