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The cost of millions of mobile phone and broadband contracts is set to soar, with the poorest customers facing the biggest price increases of up to 11 per cent.
Mobile phone and internet customers have suffered price increases of up to 7.9 percent this year as providers pass on the cost of inflation, often with an extra 3.9 percent.
But for some customers, those price increases will pale in comparison to the bill rises that broadband and mobile companies such as BT, EE and Vodafone are planning.
Last week, regulator Ofcom banned inflation-linked price rises from 17 January 2025, arguing that they took many customers by surprise.
Instead, phone and broadband companies need to display medium-term price increases in pounds and pence prominently.
Cost of communications: Households have seen two years of higher-than-average increases in phone and internet bills, plus rising costs for energy bills, mortgages, rent, food and more.
Ofcom did not impose any limits on what these companies could charge.
As a result, many broadband and mobile phone companies have already adopted their own interpretation of the new system, under which price increases in the medium term will be even higher than under the old system.
So far, all the communications companies that have announced price changes have moved to a flat rate, a kind of poll tax, where everyone pays the same amount regardless of the cost of their mobile phone or broadband plan.
The problem is that this means that those with cheaper internet and mobile phone contracts (who are probably the least well off) face proportionally steeper price increases than those with more expensive contracts.
James McQuillan, country manager for Lyca Mobile in the UK and Ireland, said: ‘Providers will now charge customers a flat rate increase in ‘pounds and pence’ rather than ‘3.9 per cent plus inflation’, meaning those with budget constraints for cheaper deals now risk paying even more than before.
A £1.80 increase means a lot less to someone paying £40 a month than it does to a user paying just £10.
‘A general increase of £1.80, for example, means much less to someone paying £40 a month than to a user paying just £10.
‘Customers will no longer be afraid of unexpected price increases, but fixed price increases will have no less impact.’
This is how all the major broadband and telephone companies plan to increase their prices (at least, all those that have already stated it).
For mobile phone contracts, the part of your bill that increases mid-contract is airtime, data costs and minutes, rather than the cost of the phone.
The mobile phone bill increases
Vodafone – £1.80
This means someone on Vodafone’s cheapest plan (a Dorro 8100, paying £18 a month) would see a 10 per cent increase.
Someone choosing the most expensive deal, a Samsung Galaxy ZFold5 with international roaming, which costs £90 a month, would see just a 2 per cent increase.
US – £1.50
This means someone on a cheaper EE mobile contract, with a Motorola G14 paying £15 a month, would see a 10 per cent price increase.
Someone with a Samsung Galaxy Z Fold6, paying £69.88 a month, would pay 2.14 per cent more.
EE has fixed price contracts with no cost increases in the medium term.
Major mobile companies O2 and Three continue to implement inflation-linked price increases. Sky Mobile also implements annual price increases, but these are not linked to inflation.
Some providers, like Lyca Mobile, do not increase their prices mid-contract.
Broadband price increases
Prices for online offers vary depending on where in the country you are located.
US – £3
This level of price increase means that an internet plan with a download speed of 37MB/s costing £29.99 a month, EE’s cheapest, would rise by around 10 per cent.
A more expensive option, such as a 900MB/s gigabit plan costing £44.99, would rise in price by 6.6 per cent.
Plusnet – £3
This means that a plan that costs £25.99 a month, one of Plusnet’s cheapest options, will rise in price by 11.5 per cent.
A more expensive 900 Fibre package, costing £37.99 a month, would rise by 7.8 per cent.
Virgin Media and TalkTalk’s broadband deal prices are linked to inflation, while Sky sets its own price increases independently of inflation.
Many smaller broadband companies are not increasing their prices in the medium term, including Cuckoo, Hyperoptic and Zen Internet.
An Ofcom spokesman said: “Inflation may be low now, but as we have seen in recent years, it can be incredibly volatile and we don’t think consumers should take that risk.
‘Our intervention means that customers will have certainty and clarity in advance about the prices they will pay, so they can compare offers and select the best option for them.
‘For people claiming certain benefits, cheaper packages are available, known as social tariffs, which do not include any mid-contract price increases.’
What companies say
A Vodafone spokesperson said: ‘In line with Ofcom’s consultation, we are moving away from inflation-linked price increases from 2 July 2024 for our consumer customers and some small business customers.
‘Before a customer signs a new contract or renews their contract with us, from 2 July 2024, they will be told exactly how much their contract will cost in pounds and pence, and when that price increase will occur.
“We have introduced two new mobile phone tiers with a fairer, lower price increase of £1.00 per month for our basic plans. We are committed to protecting vulnerable customers and are not increasing prices on our social tariffs or for customers registered as financially vulnerable.”
Ofcom rules do not allow mobile phone companies to increase social tariff prices mid-term and also state that the vulnerable must be treated fairly.
EE and Plusnet declined to comment.
Find the fastest and cheapest broadband, and see if you can save
Broadband, TV and phone contracts are notoriously strict and customers often let deals drag on for many years while providers jack up prices.
But you may be able to get faster broadband, a better TV package and a better phone deal, while saving money every month.
It’s always worth shopping around to see if you can save, especially now that the cost of living crisis is raging.
This is Money has partnered with Broadband Choices to give readers the ability to easily search for the best and cheapest deals on their broadband, mobile and TV.
Can you save? Compare broadband, TV and phone deals
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