Millions will be out of pocket when mobile phone and broadband bills rocket from April
Millions of mobile phone and broadband customers could see their bills increase by 7.9% following yesterday’s announcement of higher-than-expected inflation figures.
Most of the main providers’ contracts contain mid-contract price hikes that come into effect every April that are linked to December’s inflation figure plus an additional 3.9%. With December’s inflation being confirmed at 4% plus the additional 3.9%, most contracts will see a 7.9% spring rise.
This will leave a typical UK household of four people with four mobile phone contracts, up to £369.40 worse off over two years.
Vodaphone and Three have both confirmed that their contacts will increase by 7.9% this April. While BT customers will also face their bills rising, however, the provider has stated this is the last time it’ll use inflation-linked rises, which it’ll scrap from 2025.
However, BT could well have jumped before it was pushed, with Ofcom currently reviewing index-linked rises and proposing to ban the process because it confuses customers, with many not fully understanding what it means and how it affects them when signing up for new contracts.
This year’s rise is considerably less than the hike of between 14.4% and 17.3% customers faced last year because the interest rate was so high.
Consumer group, Which? has condemned the practice:
Rocio Concha, the director of policy and advocacy at Which?, said: “Millions of people face price rises they could never have predicted when they signed broadband or mobile contracts and may struggle to afford. Given the regulator has found inflation-linked mid-contract price rises harm consumers and set out proposals to ban them, it would be unconscionable for telecoms providers to proceed with these hikes.
“Telecoms firms must do the right thing – scrap their plans for unfair price hikes this April and end unpredictable in-contract price increases once and for all, so everyone can understand what they will pay when they sign up to a contract for these essential services.”
What are mid-contract price rises?
Mid-contract price rises are when a provider increases the cost of your monthly broadband or mobile phone bill during your contract term.
They occur once a year in April and are tied to the Consumer Price Index (CPI) inflation figure that’s published every January.
Many providers add a further 3% to the inflation figures to help offset their own rising business costs.
Can I leave my contract to avoid mid-contract price rises?
Whether you can leave mid contract depends on the terms and conditions of your contract.
Usually a fixed contact for a service means that you’ve both agreed to pay a set amount each month on an agreed date.
However, broadband and mobile phone contracts are different – they tend to stipulate the price could increase mid-contract.
If price increases are included in your contract and you don’t agree to the terms, you won’t be able to sign up for the service. You’ll have to find a provider who doesn’t include yearly increases in their contracts but there are very few of these.
Essentially if you want to leave your contract because of these price rises and have agreed to the term and conditions, you will have to pay exit fees.
What are social broadband and mobile tariffs?
Social tariffs are cheaper broadband and phone packages for people claiming universal credit, pension credit and some other benefits. Some providers refer to them as ‘essential’ or ‘basic’ broadband.
They’re delivered in the dame way as normal packages, just at a lower price.
Here’s how they can help:
- They’re cheaper than a regular package with current prices ranging from £10-£20.
- Most tariffs offer superfast broadband at speeds over 30 Mbit/s – fast enough for you to keep in touch with friends and family, stream HD films or shop online.
- They’ll cost you next-to-nothing to set up – if you do have to pay anything it’ll only be a small amount.
- If you provider offers a social tariff it won’t cost you anything to switch.
- The prices won’t increase mid-contract so what you agree is what you pay throughout.
- And it costs you nothing to leave mid-contract.
If your current provider doesn’t have a social tariff, they may allow you to leave your current contract without paying a penalty.
Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.
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