O2 to hike its prices by 2.7% - what can you do about it?

The mobile giant has announced the hike on the same day new rules from telecoms regulator Ofcom come into force. The price of certain out-of-bundle call costs and texts, as well as international call prices are also increasing.

Ofcom's new rules mean you can leave mobile, landline or broadband contracts penalty-free if a provider ups prices mid-term if it hadn't warned you about the rise when you bought the contract (see our Cheap Mobile Phones guide to get the best deal).

However it only covers contracts signed from today onwards, so O2's eight million existing mobile customers may struggle to escape their contract penalty-free. Many disgruntled customers vented their frustration over the move on Twitter.

@rebeccaellul wrote: "Put simply: O2 increasing my phone pay monthly tariff TWICE within 18 months of contract is unacceptable with no extra customer value". @lordzargon tweeted: "Within a month of my wife signing a new contract, O2 put her bill up because of 'interest rates'. Obscene. I won't be upgrading in May."

Here are your rights to cancel your contract.

What's happening?

All of O2's pay-monthly mobile customers will see their bills rise by 2.7% – in line with last month's Retail Price Index (RPI) measure of inflation – when they receive March's bill.

Prices will also rise by 2.7% for O2 Refresh customers. If you're one of them, this will only apply to the Airtime portion of your monthly bill – your monthly phone plan cost won't be affected.

Anyone who signs up to an O2 pay-monthly mobile contract from today will also see their costs rise in March.

O2 says the price rise means most of its customers will pay up to 60p/month more than at present.

From 1 March, O2 is also upping the cost of certain out-of-bundle texts and calls, as well as international call costs.

UK voice calls will increase from 35p a minute to 40p a minute, with texts going up from 12p to 15p.

Meanwhile calls from the UK to Australia, for example, will rise from 60p a minute to 80p a minute. See O2's website for full details of which calls and texts are increasing in price.

Is O2 allowed to do this?

• I signed up or upgraded before 23 January: O2 says its terms and conditions say it can increase monthly subscriptions by the rate of RPI once every 12 months. O2 last increased prices on 28 February 2013. It adds its terms and conditions have always stated charges other than your monthly subscription are subject to change.

• I signed up or upgraded on or after 23 January: O2 says its current terms and conditions "explicitly state" that monthly subscription charges will increase or decrease every year in line with RPI. It adds its terms and conditions have always stated charges other than the monthly subscription are subject to change.

Can I leave my contract penalty-free?

The rules on whether or not you can leave your contract penalty-free depend on when you signed up to O2.

• I signed up or upgraded pre-23 January: O2 says only those whose prices rise by more than 10% compared to their previous month's bill can exit their contract penalty-free. As this is a 2.7% increase, you won't be able to use this caveat to escape fee-free. The only option you have is to argue the price increase is of "material detriment" under Ofcom's old rules – although there's no set definition of what constitutes material detriment.

  If you don't get a satisfactory response from O2 within eight weeks, you can take your complaint to the Ombudsman Services.

• I signed up or upgraded on or after 23 January: You're covered by Ofcom's new rules, which say you can escape your contract penalty-free if a provider ups prices mid-term without warning you before you signed up. However, as O2 has warned customers signing up or upgrading on or after 23 January that it'll be increasing prices by 2.7% from March, you won't be able to leave your contract penalty-free.

Why is O2 doing this?

An O2 spokesman says: "Price increases are never welcome but inflation has an impact on our costs. For most of our customers it will mean an additional charge of less than 60p on their monthly subscription.

"It means we can continue to invest in our network and the services that matter to our customers while still offering great value for money."

See the O2's website for more information on the price hikes.