Three confirmed that home broadband, contract handset, contract SIM and contract mobile broadband customers who joined or upgraded on or after 29 October 2020 will be subject to a new fixed annual rate rise of 4.5%.

This will come into effect in April 2021. However, it won’t apply to add-ons or out of bundle charges.

Earlier in April this year, Three Mobile customers were hit with a lesser 2.7% price hike which was based on the Retail Prices Index (RPI) measure of inflation for January.

A Three spokesperson, said: “Like other mobile providers, our pay monthly plans are subject to an annual price change. We have taken the decision to apply an annual fixed percentage increase of 4.5% for new and upgrading customers from 29 October 2020. This means, for example, that a £20 per month contract will see an increase of 90p per month. This change will be applied in April 2021.

“We believe that integral to a great customer experience is certainty and transparency. With a fixed price change compared to the variable and unpredictable increases applied by other MNOs, customers will not have to rely on a fluctuating RPI or CPI rate to clearly understand the full cost of their contract.

“Central to providing the best possible service and range of products is our network, and we must invest more to deliver on this. We are investing +£2 billion in the UK’s fastest 5G network to ensure we have a strong network, capable of delivering better connectivity, every day, for every customer.”

Vodafone price changes

Vodafone currently uses March’s RPI figure for annual bill price hikes which came in at 2.5% this year. However, customers will be switched to a CPI – Consumer Prices Index measure of inflation – plus 3.9% model, based on January’s figure.

Had this pricing model been used this year, Vodafone customers would have been hit with a 5.7% rise (1.8% CPI in January).

However, Vodafone added that the new pricing strategy will only apply to upgrades or new contracts taken out from 9 December 2020 so existing customers will not be affected.

However, these customers will be moved onto the new price model:

• Pay monthly plans
• SIM only plans
• Tablet/device plans
• Watch (E.g. Samsung and Apple watch)
• OneNumber (for watch)
• Home broadband (excluding Extra plans still in contract)
• Gigacube
• Data Dongle
• Mobile WiFi
• Data only SIMs
• Vodafone Basics

As it impacts new and upgrading customers, it does mean they aren’t able to leave penalty-free.

A Vodafone spokesperson, said: “We recognise no one wants to see price rises, but these are necessary for us to continue investing in our networks, products and services. This year, our annual price rise will change to the CPI rate plus 3.9%, for new and upgrading customers from 9 December.”

The move by Three and Vodafone follow BT, EE and Plusnet which in September announced a “simple, transparent and predictable model” which will see annual price hikes by the CPI measure of inflation (from January) plus 3.9% taking effect from 31 March.