Orange and Vodafone hike pay as you go mobile costs

While mobile networks are told to lower roaming costs, from today Orange pay-as-you-go customers will face increased prices for making calls and texts within the UK, with Vodafone pay-as-you-go price rises coming into force on 14 July.

Key Points

• Orange PAYG price increases come into force today

• Vodafone PAYG price increases come into force on 14 July

• Price rises blamed on the reduction in termination rates introduced by Ofcom in April

• Orange price hikes: Dolphin, Monkey and Canary users from today will be charged 25p per minute to make calls, a 25% increase on its previous price of 20p, while Dolphin, Monkey, Canary and Starter users will be charged 12p per text, which is up from 10p.

• Vodafone price hikes: From 14 July Simply users will be charged 25p per minute to make a call, which is up from 21p. The cost to listen to voicemail will also increase from 21p to 25p per minute, while texts will go up from 10p to 12p.

  Vodafone pay-as-you-go customers on other price plans will face the largest increase of a whopping 66%, as prices rise from 15p per minute to 25p per minute.

T Mobile, O2 and Three have all confirmed that at present they have no plans to increase pay-as-you-go rates. Why have rates increased?

Vodafone says prices have risen as a result of new termination rates (the wholesale price providers pay to end calls) introduced in April by Ofcom, which saw the price decrease in a bid to reduce the rate by 80% over the next four years (see the Calls to mobile phones are set to become cheaper news story).

Currently the termination rate per minute is 2.66p and by 2014 it should only cost 0.69p per minute.

A spokeswoman for Vodafone says: "We believe we continue to offer great value for all pay-as-you-go customers compared with our competitors.

"This price rise comes after recent regulatory changes. During our discussions with Ofcom over mobile termination rates, we stressed that if the rates came down rapidly and dramatically, the cost of pay-as-you-go was likely to rise as a consequence."

Ofcom, however defends the decision to reduce termination rates, saying operators, such as BT, have already improved deals as a result.

An Ofcom spokesperson says: "There is a lot of competition in the mobile market and we urge consumers to shop around to get the best deal for them.

"When we cut wholesale mobile termination rates – the high rates that mobile operators were charging each other to end calls on their networks – we did so in a way that would increase choice for consumers and lead to cheaper landlines calls.

"We have already seen some operators improving deals for consumers as a result of our decision."

How can consumers cut costs?

The key way for consumers to keep costs down is to opt for a plan that suits your needs, whether that's one tailored to texts, calls or international usage, as well as use price comparison sites to compare the best deals.