Table of Contents
- Households will be spared from inflation-related price increases in the medium term starting next year
- But experts say more needs to be done to protect housing from unfair costs.
Consumers will be protected from surprise price increases on mobile phones, TV and broadband thanks to a regulatory crackdown.
Currently, most communications and Internet providers increase their prices mid-contract in line with inflation, often by an additional 3.9 percent.
This could lead to prices rising by 7.9 percent, as happened in April and May of this year for millions of customers.
But customers will be protected from unexpected price increases from January 17 thanks to new rules from regulator Ofcom.
Connectivity tax: Mobile and broadband companies began implementing inflation-linked price increases in recent years, hitting many households hard when inflation began to soar.
Broadband, TV and mobile phone companies can still raise their charges, but any increase must be specified at the time the deal is signed, in pounds and pence rather than percentage terms.
Ofcom was considering the ban in December 2023.
Cristina Luna-Esteban, Ofcom’s director of telecoms policy, said: “People need to have certainty about their monthly outgoings. But that’s impossible if you’re locked into a contract where the price could change based on something as hard to predict as future inflation.
“We are taking action on behalf of phone, broadband and pay-TV customers to stamp out this practice, so people can be sure of the price they pay, compare deals more easily and take advantage of the competitive market we have in the UK.”
Any new phone, broadband or TV contracts taken out before 17 January may still increase in line with inflation each year.
For mobile phones, the part of your bill that increases is the airtime (the cost of calls and data), rather than the price of the phone itself.
Ofcom said around three in five broadband and mobile customers were hit with inflation-linked price rises by April 2024.
Many were caught off guard and faced with unexpected increases in their bills.
However, consumer group Which? said more needed to be done to ensure price rises were affordable.
Rocio Concha, director of policy and advocacy at Which?, said: ‘As Ofcom has decided to put an end to these unfair price increases, providers must put an end to this practice immediately. Ofcom must now ensure that future mid-contract price increases are set competitively.
“It is disappointing that the terms ‘prices may vary’ have not been banned. The regulator must be prepared to intervene if these ad hoc increases are used as a backdoor for suppliers to impose unpredictable price increases on customers.”
Social rates do not increase with inflation
The main type of mobile phone and internet offer that does not increase with inflation is the social tariff.
These arrangements are not open to everyone and are mostly restricted to those on benefits, those on lower incomes or the elderly.
A social tariff is a cheap offer available only to struggling households.
These cheap deals exist because since 2020, industry regulator Ofcom has required providers to offer low-cost options to customers with greater needs.
Another advantage of social tariffs is that there are no fees for leaving before the end of your term.
In their defense, broadband providers say their hands are tied to some extent when it comes to price increases.
Most broadband companies rely on Openreach’s infrastructure to deliver broadband to consumers’ homes and pay the BT-owned company an annual fee.
That fee rises with inflation each year, according to Ofcom rules, and broadband providers would argue that their costs also have to rise at least by inflation.
Not only that, but companies say that between a third and a quarter of their customers do not see price increases because they are on a social tariff, vulnerable tariff or certain fixed-rate arrangements.
However, the cost of providing broadband to these people continues to rise each year in line with inflation, meaning companies are looking to pass on the costs to other customers.
But these reasons (usually mentioned in secret by mobile and broadband companies) do not explain why many of their prices are increasing significantly more than inflation.
Nor do they explain why the now-common practice of adding a surcharge to inflation-linked increases is fairly new, with many providers only adopting this tactic in recent years.
SAVE MONEY, EARN MONEY
Boosting investment
Boosting investment
5.09% cash for Isa investors
Cash Isa at 5.17%
Cash Isa at 5.17%
Includes 0.88% bonus for one year
Free stock offer
Free stock offer
No account fees and free stock trading
5.78% savings
5.78% savings
You have 365 days’ notice
Fiber broadband
Fiber broadband
BT £50 Reward Card: £30.99 for 24 months
Affiliate links: If you purchase a product This is Money may earn a commission. These offers are chosen by our editorial team as we believe they are worth highlighting. This does not affect our editorial independence.
