Uswitch calls for providers to let consumers walk away from inflation-busting broadband and mobile contract rises
Consumers must be allowed to walk away penalty-free from broadband and mobile contracts hit by unprecedented mid-contract rises of up to 11%, says Uswitch.com, the comparison and switching service.
More than 19 million mobile users and ten million households with broadband are set to be affected by mid-contract increases this spring that could add more than £900 million a year to the nation’s bills. The increases will add £39 a year to the average broadband bill and £28 a year to mobile costs.
While providers must permit customers to leave penalty-free in light of unexpected mid-contract price rises, the majority of increases this spring will not be covered, as most contracts contain a rule allowing inflation-based price changes.
And new Uswitch research reveals millions of Brits are sleepwalking into these price rises due to a lack of understanding about inflation and what it will mean for them when they take out a deal.
Only one in a hundred consumers questioned could give the current 7.5% rate for the Retail Price Index (RPI), the inflationary measure O2 uses to calculate its mid-contract rise. The provider plans to add 3.9% to January’s RPI figure, which if unchanged, will mean an increase of 11.4%.
Less than one in ten consumers (9%) can accurately cite the latest Consumer Price Index (CPI) inflation rate of 5.4%, which BT has used to calculate its planned broadband price increase of 9.3% — more than double last year’s figure of 4.5%.
Overall, 95% of Brits believe that the inflation rate for the RPI is lower than it actually is, with 70% underestimating the CPI rate. More than half of consumers (56%) are unaware these mid-contract increases exist.
The research also found that two in five people (39%) feel the mid-contract rises are unfair, with one in ten (10%) saying they would not have taken out their current deal had they known the provider was going to increase their bill.
With BT, Virgin Media O2, Vodafone, and Three UK all due to increase their tariffs in April, one in six people (16%) said these additional bill increases would put them in a difficult financial position.
In light of these unprecedented mid-contract price rises, Uswitch.com is calling for telecoms providers to let customers walk away penalty-free if they find the increases unaffordable, and for industry regulator Ofcom to put an end to inflation-linked price increases.
Ernest Doku, telecoms expert at Uswitch.com, comments: “With inflation at its highest level in 20 years, many mobile and broadband consumers will have never experienced price rises like these before.
“Worryingly, more than half of people do not know these mid-contract rises are on their way and many more are unaware of how they are calculated.
“With most of the main providers planning increases there is nowhere to hide, and consumers are currently unable to escape mid-contract rises that are written into their contracts without paying a penalty charge.
“Ofcom should be tightening its rules regarding mid-contract increases being linked to the now rising inflation, so that all subscription pricing is spelt out in pounds and pence. Broadband and mobile users cannot be expected to forecast future inflation rates when they take out their contracts.
“In the meantime, at a time where the cost of living is under real pressure for households, providers should let consumers walk away penalty-free from these excessive, unexpected hikes.”
Find out more about price increases for mobile and broadband customers here.