Budget-conscious Brits with SIM-only deals could pay significantly more than expected – and are braced for another round of price hikes in 2024 – because of unpredictable mid-contract rises which should be banned.
On average, EE, Three and Vodafone customers could see increases of more than 8% in 2024, while O2 customers could see rises of over 10%.
That’s according to campaign group Which?’s analysis of pricing data and Bank of England inflation forecasts, as telecoms firms hike costs every April in line with the Consumer Prices Index (CPI) or the Retail Prices Index (RPI) measure of inflation plus an additional 3.9%.
Some smaller networks, including BT Mobile, Talkmobile and Tesco Mobile, will also hike their prices in line with CPI plus 3.9% in April 2024. iD Mobile confirmed to YourMoney.com that it does not and has never applied mid-contract price increases on SIM-only plans.
Based on prices on the providers’ websites for a 12-month SIM-only contract with unlimited data, calls and texts, O2 and EE customers could see the biggest annual increases of £24.02 and £20.58 respectively in the year from April 2024. Three customers could see a smaller annual price hike of £15.88 on average.
These hikes would come on top of the eye-watering price hikes of more than 17% many billpayers already faced in 2023.
Annual SIM-only price hikes
When taking into consideration both rounds of price hikes for customers who took out a 24-month SIM-only contract, O2 customers could see the biggest potential price hike of up to £124.21 as it’s the only network that uses the typically higher RPI figure to calculate price changes. The cost of the original contract came in at £672 rising to £796.21.
EE customers could face the next highest potential price hikes of up to £102.17 (from £672 to £774.17). Meanwhile, Three and Vodafone customers could face smaller price hikes of up to £87.57 and £80.27 respectively.
If SIM-only customers are in-contract and they want to avoid these hikes, they can be charged exit fees of almost £300 to leave early.
Which? said these price hikes “feel especially unfair” when ‘big four” customers could be paying significantly less elsewhere if they were able to move from their contracts without paying additional exit fees.
As an example, an unlimited data 24-month contract with a “big four” provider costs from £22 to £28 per month – before mid-contract price hikes. But equivalent rolling contracts with unlimited data are available for as little as £18 per month at rival networks. These contracts also offer the flexibility to switch if prices rise.
Which? analysis showed that by switching away to a rival provider, these customers could save as much as £120 a year, even before the upcoming price hikes are taken into account.
Ban mid-contract price hikes
Which? said it’s unfair for billpayers to commit to deals with unpredictable prices, as they don’t know how much they can expect to pay over the course of their contract when they sign up. This is why it’s calling for an end to unpredictable mid-contract price hikes.
Inflation-linked, mid-contract price rises are currently being reviewed by the regulator Ofcom amid concerns customers aren’t given sufficient certainty and clarity about what they can expect to pay.
Ahead of the consultation on this which is due to be published in December, the consumer champion urges all providers to “do the right thing” and stop using mid-contract price rises before the expected hikes come into effect.
Rocio Concha, Which? director of policy and advocacy, said: “A good broadband and mobile connection is essential to modern life. It’s completely unacceptable that these unpredictable mid-contract price hikes have been allowed to continue in the telecoms industry for so long. These contract terms dump the burden of managing inflation risk onto customers, obfuscate prices and undermine competition.
“Which? is calling on all providers to do the right thing and cancel 2024’s above inflation price hikes. Ofcom should also use their review to finally ban these unjust mid-contract price hikes that harm consumers and undermine competition. Consumers need to know exactly how much their contract will cost when they sign up.”
What do the providers say?
A spokesperson for EE said price rises are transparent, with average price increases of just above £1 per week. Meanwhile, two million pay-as-you-go customers were excluded from price changes in 2023.
O2 said it is “always clear” with customers about any future price increases, which are re-invested back into its network to meet increased demand for services.
Three provided clarifying information, but declined to provide a wider comment.
A spokesperson for Vodafone said it is “too early to make any comments on next year’s figures”, adding that it will continue to ensure customers registered as financially vulnerable can stay connected by offering social mobile and fixed tariffs which are not affected by any price increases.
Related: Guide to switching to a budget SIM-only deal.