Orange to raise monthly mobile costs

The mobile phone giant will up the cost of monthly plans by 4.34% from January, blaming "20-year high inflation" for the revised contract terms, leading to an angry reaction from users.

Those affected will see a £30 monthly calling price turn to £31.28, for example. Calls, texts and data charges will not rise.

To rub salt into their wounds, Orange insists it won't allow customers to leave their contract early as its terms state inflation-linked price rises are allowed, though it is not clear whether this stance would hold up, if challenged.

Who is affected?

Only pay monthly customers who signed-up to their current deal before 1 October will see costs rise.

Orange says anyone who has signed-up since then already has the inflation rise factored into their deal.

Angry Orange customers have already reacted with fury on our forum, after the operator sent out mass texts of the news this morning.

One forumite, Scotty1.7, says: "It stinks of 'we can do what we want to do and stuff you for being loyal!'"

Twitter user @FOXPRESIDENT wrote to our Twitter page @moneysavingexp, saying: "The Orange price increase is out of order. I will #saynotoorange at renewal."

When will prices rise?

Most will see hikes from 8 January. However, anyone who agreed a deal between April and the end of September this year, or whose bill is dated earlier than the 8th of each month, will see prices rise in February.

An Orange statement says: "Unfortunately, we've had to re-evaluate prices for the first time and are sorry to say there will be a 4.34% increase in monthly plan prices from 8 January 2012.

"Out of plan charges, such as calls, texts and data will not be changing."

Can you escape contracts early?

Orange insists it is within its rights to raise prices, meaning consumers cannot escape their contract early.

It points to its terms and conditions which state it can increase charges by up to the RPI figure in any 12-month period.

Orange states this clause has been in place for 10 years though this is the first time it has been invoked.

The increase is less than the most recent 5.4% rate of inflation, as measured in October.

However, telecoms regulator Ofcom says its rules on allowing consumers to exit a contract without penalty still apply, even if a provider states in its conditions that prices may rise during the contract.

These rules state: "Providers shall give subscribers adequate notice not shorter than one month of any modifications likely to be of material detriment.

"Providers must allow subscribers to withdraw from their contract without penalty upon such notice."

The question is therefore what is 'material detriment'. Ofcom cannot give a steer but says you should first complain to Orange if you feel you should be allowed to exit penalty-free.

If you're rejected, you have two options. You can complain to Ofcom which will investigate if enough people kick up a fuss, but can't look at individual cases. You can call it for advice on 0300 123 3333.

Alternatively, if rejected by Orange or you don't get a satisfactory response within eight weeks you may make a complaint through CISAS, a free independent dispute resolution scheme.

Lawyers at consumer lobby group Which? advise that Orange is "probably behaving legally", adding its terms and conditions would stand unless they could be successfully challenged as unfair (see Which?'s guide on your rights).

What should you do?

Martin Lewis, MoneySavingExpert.com creator, says: "This isn't a clear-cut case – so predicting the outcome of any complaint is tough.

"However, for those who want to escape their contract, it is worth formally contacting Orange and telling it you believe the price hike is of 'material detriment' and you want to leave."There is a slight chance the company will prefer to let some people go on an ad hoc, goodwill basis rather than risk having lots of people complain to Ofcom.

"If the company doesn't wilt, call Ofcom as if enough people complain it will investigate, which would see a firm have to answer on the whole thing.

"However, this is about hoping it may work, but not planning your finances on it happening."

Will T-Mobile prices rise?

T-Mobile and Orange are owned by the same company, Everything Everywhere. It says there are no plans to raise T-Mobile monthly costs.