Mid-contract broadband and mobile price hikes to be reviewed by regulator
A review into mid-contract price hikes on mobile and broadband bills has been launched by the telecoms regulator, amid concerns that providers aren't being clear enough about what customers can expect to pay during the full length of their contract.
The intervention from Ofcom comes after most major providers including BT, TalkTalk and Virgin Media confirmed above inflation prices rises of up to 14.4% to come this spring.
Martin Lewis, MoneySavingExpert.com founder, said: "Ofcom looked into this issue a few years ago, and the solution it came up with then was too weak.
"During a period of lower inflation the impact of the relatively flaccid rules wasn't felt. Now, people are being slapped across their fiscal faces with 14% rises and it's very obvious this is an issue.
"I've twice said on my show that if I ran Ofcom I'd ban these mid-contract above inflation rises. Hopefully soon we'll see it do the same."
The regulator will review whether tougher rules are needed
Ofcom does not set broadband and mobile prices directly, and general consumer law doesn't prevent companies from increasing prices during the contract period – provided they do so fairly.
However, the watchdog said it was concerned about the level of uncertainty customers face with future inflation-linked price rises written into contracts. In particular, the unpredictability of inflation rates means it can be difficult to know what an inflation-linked price rise will actually mean in pounds and pence when you first sign up to a contract.
Ofcom's preliminary research found that around a third of mobile and broadband customers do not know whether their provider can increase their price. Among those who do know their provider can increase their price, around half do not know how this would be calculated.
Its review will examine these issues in detail to see whether tougher protections are needed, with findings to come "later in the year".
Millions of customers are out of contract and free to leave, so check if you can switch and save
Broadband and mobile firms have millions of customers who are out of contract and have simply been rolled on to often pricier tariffs without signing up for them. But if that's you, you can leave at any point penalty-free - and given the best broadband and mobile deals tend to be for newbies, there's a good chance you're overpaying anyway. Benchmark prices elsewhere and switch if you can get a cheaper deal.
Alternatively, if you're willing to stay, you can try haggling and see if your provider will match or beat a deal you've found elsewhere. Telecom firms are among the top companies to haggle with, according to our latest poll of MoneySavingExpert.com users. See our broadband haggling and mobile haggling guides for more help.
Within your minimum contract term? In most cases, you CAN'T cancel penalty-free
If you're in contract – meaning you actively signed up to a new tariff within the last year or possibly two (do check) – the price rise will likely be part of that contract. In most cases this means you won't be able to cancel penalty-free.
The two main exceptions are:
- Sky broadband and home phone – price hikes on these packages aren't written into contracts, so you can leave within 30 days of being notified about the increases without having to pay early termination fees. However, this is NOT the case for Sky TV packages. See our Sky prices hikes story for full info.
- Virgin Media broadband, home phone and TV – Virgin's price hikes for this year were not written into contracts, so you can leave penalty-free. See our Virgin Media price hikes story for full info.
In other cases, if you're unhappy with the price rise, you should note when your contract's due to end and start looking for new deals nearer the time.