Pull plug on phone and broadband giants’ price hike rackets… NOW!

Wealth & Personal Finance today calls for a stop to the mid-contract broadband and phone price racket that will cost households millions of pounds.

Customers of BT, EE, Plusnet, TalkTalk, Three, O2, Virgin Media and Vodafone are set to see their broadband and phone bills hiked in the coming weeks.

Most face inflation-busting rises of 13 or 14 per cent. Some will pay over £100 more a year. The price rises even apply to customers in the middle of their contracts. In most cases, people will be forced to pay up – or else be hit with a penalty if they choose to cancel.

Raising prices mid-contract is grossly unfair. It means that customers who sign up for a phone or broadband deal have no idea what they will be paying by the end of the contract.

Millions of households are budgeting every pound as they battle against the rising cost of living. Locking into a contract should help by giving some certainty over how much they will have to pay. This is true of most consumer contracts, including fixed energy bills, mortgages and insurance premiums.

Unplugged: Customers of BT, EE, Plusnet, TalkTalk, Three, O2, Virgin Media and Vodafone are set to see their broadband and phone bills hiked in the coming weeks

And yet broadband and phone providers are disgracefully able to write into their customers’ contracts that their bills will rise every year, by an amount unknown by the customer when they sign up.

The regulator, Ofcom, is looking into this issue, but has only promised to publish its initial findings later in the year. It admitted to The Mail on Sunday that it will not publish them until after this year’s price rises have taken effect. That is why today the MoS is calling for:

  • A ban of mid-contract price hikes;
  • Customers to be allowed to exit their contract penalty-free if they are not happy with mid-contract increases to their bills; 
  • Ofcom to urgently report its findings before it’s too late. 

Wealth & Personal Finance has been contacted by scores of readers who are worried about paying their increased bills and who are furious that they are being hit by the mid-contract rises.

Typical is Cliff Hamilton, 70, from Portsmouth, who has been told his Virgin Media phone, TV and broadband package is set to rise by almost £30 in April. The ex-Forces retiree has been with the provider and its predecessor, NTL, for 33 years and has never missed a payment.

‘It’s daunting to think of moving to a different provider, so I have come to the difficult conclusion that we will have to cut back on our services from Virgin Media and accept cheaper, but slower internet connection,’ he says.

Gordon Smith, 56, from Luton, has been told his EE bills are going to rise by more than 13 per cent. He believes the increases households face are unacceptable considering the length of contracts people are incentivised to agree to. ‘First, we were asked to lock in to 12-month contracts, then it rose to 18-month, then 24 – recently I was asked if I wanted a 36-month contract. But the providers tie us in and we have no idea what is coming down the line.’

Gordon thinks it’s totally unfair that customer bills are rising to pay for providers’ investments, but that the returns are still paid to the shareholders. ‘I understand that profits paid to shareholders benefit us through our pension funds,’ he adds. ‘But I’d rather have the money upfront than wait to get it in my pension.’ John Dick, 75, a Sky customer from Romsey in Hampshire, suggests the issue could be solved by limiting contract terms.

‘I believe a contract should be binding and not allowed to increase in price mid-way,’ he says. ‘It’s disgraceful that they tie you in for 18 months or longer and charge you a fortune to get out of it. There should be a maximum term of 12 months, with a 30-day notice period.’

Most of the major providers increase prices every year by the rate of inflation, plus an additional 3.7 or 3.9 per cent. With inflation into double digits, the rises this year are set to hit record highs. Alan Harmer, 78, from Letchworth in Hertfordshire, believes action on this issue is shockingly overdue. ‘Some years ago, when inflation was just one or two per cent, telephone and broadband providers were permitted to increase their prices by 3.9 per cent plus inflation, to encourage investment in infrastructure,’ he says. 

‘This issue should have been looked into then, before inflation rose. The big suppliers are being allowed to take profits and let the public pay for the risk.’ Alan is with BT and will see a double-digit rise to his bills.

Alan Bass, 72, from Broxbourne in Hertfordshire, says he has no issue with telecom companies making a profit. But, he was shocked to receive a letter from Virgin Media informing him that it is changing its terms and conditions so it will be able to increase his bills every April by inflation plus 3.9 per cent.

‘What gets up my nose is that, if you have a two-year contract, you will get two increases to your bills. They are building in an inflation rise on top of an inflation rise,’ he says. ‘Providers ask you to sign up for a two-year period, but how can you sign a contract if you don’t know whether you’ll be able to afford it?’

Alan has been a Virgin Media customer since the 1990s, and is set to pay more than £87 for his package when his bills go up by 13.8 per cent.

For some readers, these latest price rises are the final straw.

Maria Astley, from Birmingham, is horrified that Virgin Media is planning to put up her mum’s bills by 20 per cent. ‘She is a 91-year-old lady with dementia and cannot be without a phone,’ says Maria.

‘It is her lifeline and also our way of contacting her throughout the day to ensure her wellbeing when we cannot go around to check on her. How can this be justified? Ofcom must step in to stop this – it is getting ridiculous.’

Most of the providers that link bill rises to inflation use the consumer prices index (CPI) measurement. This is seen as one of the most accurate measures of inflation and is among those preferred by the Office for National Statistics. But O2 and Virgin Mobile use the outdated Retail Price Index (RPI), which tends to be higher and is now frowned upon by statisticians. RPI inflation factors in housing costs, while CPI does not.

Brian Barbour, 68, a professional pension trustee from Edinburgh, says it’s ‘appalling’ that some companies base their increase on RPI inflation. ‘Since when did telecom companies get affected by housing costs?’ he asks.

Brian adds that many put a floor on the price increases so that even if inflation turns negative, bills will still rise. ‘It’s heads they win, tails they win,’ he says. ‘Companies can hedge some of their costs so they know in advance how to protect themselves. Customers have the right to expect predictability in their outgoings where possible as well.’


A BT consumer spokesman, speaking for BT, EE and Plusnet, said: ‘We understand that price rises are never wanted nor welcomed, but recognise them as a necessary thing to do given the rising costs our business faces.

‘This year’s increase, of just above £1 per week for the average customer receiving the rise, reflects incredible value given the cost increases we’re facing and the considerable investments we’re making in our network. We are also protecting vulnerable customers suffering from financial hardship or digital exclusion through our market-leading social tariffs.’

TalkTalk says that, unlike Virgin and BT, it does not own the lines it uses for its network and cannot control the wholesale price it pays, which is increasing by CPI inflation.

 She is a 91-year-old lady with dementia and cannot be without a phone. It is her lifeline. How can this be justified? 

Virgin Mobile and O2 say price increases of 17.3 per cent will apply to the airtime portion of customers’ bills and not the cost of devices. A Virgin Media spokesman said: ‘We know that price rises are never welcome, particularly right now, but like many other businesses we are experiencing significantly increased costs while investing to keep pace with growing demand, as broadband usage rose more than 10 per cent last year and speeds increased by 40 per cent.’

A Sky spokesman said: ‘We have tried to minimise the impact to customers with an average price increase across all our broadband and TV customers of 8.1 per cent, which is below levels of inflation again this year – competitors’ average increase over the last two years has been nearly double Sky’s over the same period.’

A Three UK spokesman said: ‘We understand the cost-of-living crisis is having an impact on our customers at present. However, with energy and supplier prices increasing substantially and network roll-out costs rising significantly across the board, we have taken the difficult decision to pass some of this increase on to our customers’ bills.’

Unlike other major providers, Tesco Mobile does not increase customers’ bills mid-contract. A spokesman said: ‘Our ambition is to offer great value products and services. Freezing our prices for the duration of their contract has been one of the ways we have delivered on this, as it helps customers know exactly where they stand with their bills.’

TELL US YOUR VIEW: Have you been stung by a telecom price hike? Email: rachel.rickard@mailonsunday.co.uk 

An insult to the family budget 

Predicting the future rate of inflation is a fool’s game. Even those who are supposed to be good at it – the Bank of England, Government, economists etc – have been doing a terrible job. Inflation is three times higher than the Bank of England expected.

Yet predicting inflation months in advance is precisely what millions of households would have to do just to work out what they’ll pay under their broadband and phone contracts. Most will see bills leap in the coming weeks. Then they will rise again in a year, but we won’t know how much to budget for until we find out the rate of inflation in December or even January next year.

Bank of England forecasts would suggest an increase of around 8 per cent. But I’d take that with a pinch of salt. Consumers are told to compare prices between telecom providers to get the best deal. But how can we when we don’t know what we’ll be paying? One deal may start out cheapest, but end up being more expensive.

Wish to exit your deal now? Most providers charge a penalty. Adding insult to injury, BT is even increasing its early termination fees, by inflation plus 3.9 per cent.

Read more at DailyMail.co.uk