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80% of Brits say mid-contract telecoms price rises are unfair

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Written by: Rebecca Goodman
08/11/2022
Four in five adults say mid-contract price rises, for services such as broadband and mobile, are unfair and the price should remain the same until a contract ends, according to new research.

It comes as Three, the UK’s fourth-biggest mobile provider, has confirmed it will go ahead with a planned inflation-linked price rise next April.

In April, 25 million mobile and 10 million broadband customers are set to see their prices rise by up to 14%.

But 27% say an increase of £5 to their mobile or broadband bill would cause them stress, according to the study from comparison website Uswitch. Two-fifths said they think mid-contract price rises should be stopped.

Broadband providers are also expected to miss a deadline set for spring 2023 to make it easier for people to switch between networks.

Mid-contract broadband price rises

The majority of mobile and broadband providers link their annual price hikes to the rate of inflation. This means they are allowed to hike prices, even if someone is in the middle of a contract.

Some providers also include an additional price rise of around 3-4% on top of the rate of inflation to bills. As inflation is currently at a 40-year high of 10.1% for September, this could mean price hikes of around 14% next year.

They are also expected to hit when the Energy Guarantee Scheme comes to an end and average gas and electricity bills rise to £3,700.

As these price hikes are written into the terms and conditions of a mobile or broadband contract, providers are allowed to do this and customers aren’t allowed to leave without penalty if they don’t want to pay a higher price.

Only a small number of providers don’t link price hikes to inflation including Sky, Virgin Media, or Hyperoptic.

These providers do still occasionally hike prices but as the increases aren’t written into contracts or inflation linked, customers can leave without penalties if they don’t agree with the higher price, even if they are in the middle of a contract.

A quarter of those asked by Uswitch said they would choose their next phone or broadband provider based on whether they allow mid-contract price rises.

Separate research from consumer group Which? last month showed that if providers cancelled the upcoming hikes, customers could save between £102 and £133 next year.

Three hikes prices by inflation plus 3.9%

Three has become the latest provider to confirm it will go ahead with a price rise next year for customers.

It will hike prices by December’s rate of inflation plus 3.9% and this will be added to April’s bill. This is the same rate as EE and Vodafone are applying.

A spokesperson for Three said: “We understand that the cost-of-living crisis is having an impact on our customers at present.

“However, with energy and supplier prices increasing substantially and network roll out costs rising significantly across the board, we have taken the difficult decision to pass some of this increase onto our customer’s bills.”

Providers set to miss Ofcom switching deadline

In addition, it’s expected that broadband providers are going to miss the deadline of April 23 to introduce the One Touch Switch scheme.

The scheme is meant to make it easier for consumers to switch between broadband providers which are outside of the Openreach network.

Uswitch says Ofcom needs to do more to make sure this deadline is met.

Cancel hikes or let customers leave penalty free

Uswitch is calling on telecoms providers to cancel the upcoming price hikes or to allow customers to leave a contract without penalty if they don’t agree with the higher cost.

It also says Ofcom needs to do more to prevent telecoms providers from raising prices halfway through a contract.

Richard Neudegg, director of regulation at Uswitch.com, comments: “There seems to be no other industry that sees companies increasing their prices halfway through a fixed-term contract with no right to leave.

“It’s time Ofcom took action to help protect customers from these rises, so they know what they’re dealing with when signing a new contract.

“If providers cannot commit to a price for the duration of the contract, they should offer shorter contracts or the chance for consumers to leave penalty-free when prices jump.”

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