Broadband companies have been asked to reduce penalties for customers leaving mid-contract over concerns of impending “exorbitant” price increases or egress fees of more than £200.
Millions of broadband and mobile phone customers could see at least a 14% increase in their monthly bills starting in April.
Providers often attribute annual price increases to the January consumer price index (CPI) or retail price index (RPI). Despite a slight easing this month, both recent CPIs of 10.5% and RPI of 13.4% are close to 40-year highs.
BT, EE, Plusnet and Vodafone broadband contracts allow prices to increase by CPI plus 3.9%. In TalkTalk it is CPI plus 3.7%, while Shell Energy can add CPI plus 3%. Sky and Virgin Media contracts allow for mid-contract price increases, but do not provide a pricing formula like competitors.
IT confirmed a 14.4% increase this year – CPI 10.5% plus 3.9%.
Which? He warned that this is “another blow” for those looking to keep rising costs in check, given that many customers saw their broadband bills increase by nearly 10% last year.
Ofcom rules state that telecommunications providers must offer their customers the right to opt out of their contracts with impunity if they incur unexpected price increases not foreseen in their contracts.
However, as mid-contract price increases are written into the terms and conditions of some people’s contracts, Ofcom’s rule is that in these cases the customer has no right to go with impunity – so they have no choice but to accept the new higher one. pay a price or pay an exit fee to terminate their contract.
However, the rules require that the relevant terms be clearly and transparently stated at the point of sale. Ofcom is currently investigating whether in-contract price increases have been sufficiently clearly determined by phone and broadband companies before customers sign up.
Which? urges all providers to “carefully consider the extent to which mid-contract price increases can be justified in the current economic environment”.
Rocio Concha, Which? The Director of Policy and Advocacy said: “It is extremely worrying that so many broadband customers find themselves trapped in a lose-lose situation this spring, where they will either have to accept the exorbitant – and hard to justify – mid-contract price hikes or pay for costly exits. fees for leaving their contracts early and finding a better deal.
“Which? urges providers to allow their customers facing mid-contract price increases to leave without penalty. Providers should also carefully consider the level of any price hikes as many consumers are already under huge financial pressure.
“It’s totally unfair that people are trapped in this situation while many households are struggling to make ends meet. Telecom providers must step up and do their part to support their customers in the cost of living crisis.”
An Ofcom spokesperson said: “While Ofcom does not set retail prices, companies must treat customers fairly, especially during an exceptional time of difficulty for many households.
“Our rules are clear: Everyone needs to be informed of future price increases before signing up, and we’re investigating whether phone and broadband companies stick with it.
“Customers can already exit with impunity unless their provider has specified a price increase in their contract or made it clear when signing up. If you think your provider is not following the rules, you should first complain to them and, if necessary, contact the independent ombudsman who can decide on your case.”
A spokesperson for BT Consumer, which covers BT, EE and Plusnet, said: “With the December 2022 CPI rate announced now, we can confirm that our price change will continue on March 31st.
“We expect the average customer to see their prices increase by around £1 a week. This price increase is not applicable to all our customers. More than three million of our customers’ prices on our BT Home Essentials, EE Mobile Basics, PAYG, BT Basic, landline only and Home Phone Savings products are going through 2023. will be frozen until
“While telecom bills make up a small portion of total average household spending, we know it all adds up. We take seriously our responsibility to ensure our services reach the widest possible range of customers through our market-leading social tariffs.
“Customers who are financially struggling and eligible for Home Essentials can act with impunity at any point in their contract; this includes EE and Plusnet customers.
“We are offsetting our increased costs due to high inflation and making digital infrastructure investments that are vital to the UK.”