BILL HIKE
Millions of mobile customers to be hit with inflation-busting price hikes of up to 15% this year despite new rules
Plus, we've explained how to cut your telecom costs now
MILLIONS of mobile and broadband customer are facing price hikes of up to 15% this year, despite new rules to protect customers.
From January 17, telecom companies are required by Ofcom to present mid-contract price increases in pounds and pence, replacing the previous system of increases linked to the rate of inflation.
However, Richard Neudegg, director of regulation at Uswitch.com, said: "Recent rule changes for mobile and broadband mid-contract price rises apply to those taking or renewing contracts, so a large proportion of consumers can still expect to be hit by as-yet-unknown price hikes which they will only find out about on Wednesday 15.
"Many older contracts still have price increases based on December’s inflation rate, plus an additional 3.9%."
While the introduction of fixed price hikes aims to make costs clearer it means that customers on the cheapest tariffs could end up paying more under the new system.
Many providers are implementing fixed increases that are higher than current inflation rates, which are hovering around 2-3%.
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For example, BT and EE were the first providers to announce and apply their changes to all new contracts taken out from April 1, 2024.
This means customers who took out a new contract after this date will have price rises communicated in pounds and pence.
Those who took out a deal with them beforehand will still be subject to inflation-linked price rises and won’t know the exact amount they will be paying until January 15.
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In many cases, the fixed pounds and pence increase results in a higher percentage rise than applying the current inflation rate of 2.6% + 3.9% (6.5%).
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For example, a £10 BT mobile plan will jump by 15% to £11.50, versus a likely 6.5% increase under the previous system.
This trend of steeper increases under the fixed-price system is also evident across the broadband industry.
In some cases, the difference is substantial.
For example, Plusnet customers on the £25.99 a month plan face an 11.5% increase under the fixed-price model, compared to a potential 6.5% rise under the previous system.
This will mean that somebody taking out a contract now will see their bill rise to £28.99 a month, instead of £27.68 under the old method.
With inflation now down to 2%, Andrew Ferguson, editor of thinkbroadband.com, says that the shift from complex CPI plus percentage-based increases to straightforward pounds and pence rises may not be the boon it seems.
He argues that while inflation remains low, those on the cheapest contracts will be penalised the most by the new pounds and pence price hikes.
This discrepancy means that those on entry-level broadband or mobile contracts, often individuals from lower-income households, could end up paying more proportionally than those on premium packages.
INFLATION-LINKED PRICE HIKES
TELECOM firms have come under fire for above-inflation mid-contract price rises on fixed contracts for the past four years.
Due to clauses in contracts, providers can impose annual rises, usually in April.
The hikes are tied to either the Consumer Price Index or Retail Price Index inflation rate, which has soared during the cost-of-living crisis.
It means millions of customers faced hikes of up to 8.8% this year — adding as much as £50 to bills.
Firms argue that they need to be able to increase prices to keep up with rising costs.
But consumer experts argue that a fixed contract should live up to its name — and stay fixed.
When will I be affected?
BT, which also owns EE and Plusnet, said in April that it would no longer raise prices mid-contract based on a percentage linked to inflation.
All BT and EE customers who took out a new contract after April 10, 2024, are affected.
From March 2025, the price of mobile contracts will rise by £1.50 a month and broadband tariffs by £3 a month.
EE TV customers will have to pay an extra £2 a month.
The provider has said those vulnerable customers on EE Basics or BT Home Essentials contracts will be exempt from any price rises.
Plusnet will also increase its broadband price by £3 per month from the end of March.
Vodafone mobile phone customers will see their bills rise by £1.80 a month while Home Broadband customers will see prices hiked by £3.
Vodafone has said that price increases will not be applied to customers identified as financially vulnerable or those on social tariffs.
Since August 12, 2024, customers joining or re-contracting with TalkTalk will see the monthly amount they pay for their broadband increase by £3 annually in April.
Three has said new and upgrading Three customers will see their annual price rise determined by pound and pence from April.
Broadband increases are capped at £2 and mobile rises between £1 and £1.50 depending on the data allowance.
Tesco Mobile said someone on a £14.99 a month a deal would see their monthly contract price increase by 90p in April.
Customers on a £30 a month deal will see their basic monthly price increase by £1.80.
These increases suggest that the typical cost of a customer's contract will rise 6% from April 2025.
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This week, Virgin Media O2 confirmed that any broadband customer joining the network from January 9 will see their prices increase by £3.50 a month from April.
O2 customers joining or re-contracting after the same date will see their monthly bills rise by £1.80 a month.
CUT YOUR TELECOM COSTS
SWITCHING contracts is one of the single best ways to save money on your mobile, broadband and TV bills.
But if you can't switch mid-contract without facing a penalty, you'd be best to hold off until it's up for renewal.
But don't just switch contracts because the price is cheaper than what you're currently paying.
Take a look at your minutes and texts, as well as your data usage, to find out which deal is best for you.
For example, if you're a heavy internet user, it's worth finding a deal that accommodates this so you don't have to spend extra on bundles or add-ons each month.
In the weeks before your contract is up, use comparison sites to familiarise yourself with what deals are available.
It's a known fact that new customers always get the best deals.
Sites like MoneySuperMarket and Uswitch all help you customise your search based on price, allowances and provider.
This should make it easier to decide whether to renew your contract or move to another provider.
However, if you don't want to switch and are happy with the service you're getting under your current provider - haggle for a better deal.
You can still make significant savings by renewing your contract rather than rolling on to the tariff you're given after your deal.
If you need to speak to a company on the phone, be sure to catch them at the right time.
Make some time to negotiate with your provider in the morning.
This way, you have a better chance of being the first customer through on the phone, and the rep won't have worked tirelessly through previous calls which may have affected their stress levels.
It pays to be polite when getting through to someone on the phone, as representatives are less inclined to help rude or aggressive customers.
Knowing what other offers are on the market can help you to make a case for yourself to your provider.
If your provider won't haggle, you can always threaten to leave.
Companies don't want to lose customers and may come up with a last-minute offer to keep you.
It's also worth investigating social tariffs. These deals have been created for people who are receiving certain benefits.
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