The UK’s biggest telecoms providers are preparing above-inflation price rises for broadband and mobile phone customers that will add almost £500 million to consumers’ bills from next spring, according to a new estimate.
BT, EE, Vodafone, Virgin Media, O2 and TalkTalk are set to increase the bills of more than 22 million broadband and mobile customers from April and May next year under ‘mid-contract‘ price increase clauses.
The practice, which is not allowed in other utility sectors such as electricity and gas, involves increasing bills using either the Consumer Price Index (CPI) or Retail Price Index (RPI) measures of inflation and then adding almost four percentage points on top of the official rate.
Research by consumer watchdog Which? estimates that telecoms companies will make £488m from mid-contract price rises in 2024, which will be based on December’s inflation figures released in January.
Inflation fell to 4.6 per cent in October, compared with a CPI rate of 10.5 per cent and an RPI rate of 13.4 per cent last December, but two years of steep bill increases will hit cash-strapped households. Which? based its calculation on the Bank of England’s forecast of 4.5% CPI inflation in December and the Office for Budget Responsibility’s forecast of 6.5% RPI inflation for the same month.
Which? and Citizens Advice have written to telecoms regulator Ofcom calling for a ban on mid-contract price rises as part of its review of the practice, which it launched in February.
Which? director of policy and advocacy Rocio Concha said: “This is completely unacceptable during the worst cost of living crisis in decades. Ofcom should ban these unpredictable price hikes and give people the certainty of knowing exactly how much their contract will cost when they sign up”.
For the next round of price rises, BT, which owns EE and Plusnet, and Vodafone will add 3.9 percentage points to the December CPI rate. TalkTalk will add 3.7 percentage points.
Virgin Media O2 will add 3.9 percentage points to the December RPI rate, which is typically several percentage points higher than the CPI rate, for its broadband and mobile businesses.