roadband customers could pay £150 more than they expected to over two years due to “unpredictable” mid-contract price rises, consumer group Which? has warned.
Which? has called on regulator Ofcom to ban the practice altogether as it found that BT, EE, Plusnet, Shell Energy, TalkTalk and Vodafone customers could see increases of more than 8% on average in 2024 while Virgin Media customers could see rises of more than 10%, based on analysis of Bank of England inflation forecasts.
Many of the biggest broadband firms – such as BT, EE, Plusnet, Shell Energy, TalkTalk, Virgin Media and Vodafone – raise prices every April in line with the Consumer Price Index (CPI) or the Retail Price Index (RPI) plus an additional 3%, 3.7% or 3.9%.
Customers wanting to avoid these hikes can be charged punitive exit fees to leave their contract early.
From working and school to online banking and social media, a good broadband and mobile connection is essential to everyday modern life
Based on average contract amounts from the Which? 2023 broadband survey; Virgin Media, BT and EE customers could see the biggest annual increases of £50.52, £43.68 and £43.68 respectively in the year from April 2024, the watchdog calculated.
Shell Energy Broadband customers could see the smallest annual price hike of £27.16 on average.
These hikes would come on top of the more than 14% mid-contract uplifts many consumers faced in 2023.
Which? also calculated how much extra these two rounds of price hikes could cost a customer for each provider who took out a deal in January 2023 over the course of their 18 or 24-month contract.
Based on average amounts from the Which? 2023 broadband survey, BT and EE customers who took out a contract in January 2023 could see some of the highest average price hikes of £147.43 and £147.31, while Vodafone and Plusnet customers could see rises of £122.38 and £117.87 respectively.
TalkTalk customers could see a smaller hike of £76.09 on average over the course of shorter 18-month contracts.
Shell Energy Broadband did not apply its 2023 inflation-linked price hikes of 12.5% to customers who joined from January to March 2023.
However, if a Shell Energy customer joined before January 2023 then, based on average amounts from the 2023 broadband survey, they would pay an extra £45.27 a year from Spring 2023 to Spring 2024.
Ofcom should also use their review to finally ban these unpredictable mid-contract price hikes that harm consumers and undermine competition
Virgin Media did not use inflation-linked price hikes in 2023 but some customers’ prices did increase by an average of 13.8% per cent due to ad hoc price rises, according to Which?
According to Virgin Media, customers who signed up after November 2022 would not have faced the ad hoc price rise in Spring 2023.
Those on a fixed-price promotional deal – like those offered to new customers – would also not have seen the price hikes take effect until after their deal ended.
Which? argues that it is unfair for consumers to be signed up to deals that do not give them certainty about how much they can expect to pay over the course of their contract, and then face exit fees if they want to leave early.
A survey by the group found that 78% of consumers believe that mid-contract price hikes are always unfair and that people overwhelmingly value pricing certainty for broadband contracts.
Which? has launched The Right to Connect campaign calling for clearer and fairer pricing for telecoms customers and an end to unpredictable mid-contract price hikes.
Ofcom is currently reviewing inflation-linked, mid-contract price rises and is due to publish its consultation in December.
Rocio Concha, Which? director of policy and advocacy, said: “From working and school to online banking and social media, a good broadband and mobile connection is essential to everyday modern life.
While we know that price changes are never welcome, against a backdrop of rising costs, increased usage and continued investment, we have openly and directly set out to customers that we are introducing inflation-linked price changes
“That’s why it’s outrageous that unpredictable mid-contract price hikes have been allowed to continue in the telecoms industry for so long – especially when so many have been struggling to make ends meet during the cost-of-living crisis. Consumers must have certainty about the total cost of their contract.
“Which? is calling on all providers to do the right thing and cancel 2024’s above inflation price hikes.
“Ofcom should also use their review to finally ban these unpredictable mid-contract price hikes that harm consumers and undermine competition.
“Consumers need to know exactly how much their contract will cost when they sign up.”
We understand that price rises are never wanted nor welcomed but recognise them as a necessary thing to do given the rising costs our business faces
A Virgin Media spokesman said: “We are always clear and transparent with customers about any price increases. We wrote directly to all customers who received a price rise this year to notify them of their exact increase, and gave them the right to cancel without penalty within 30 days if they wished.
“While we know that price changes are never welcome, against a backdrop of rising costs, increased usage and continued investment, we have openly and directly set out to customers that we are introducing inflation-linked price changes from April next year. This widely used format will provide more certainty on when and how any future increases will occur while fuelling the investment required to ensure we keep providing the fast and reliable connectivity our customers rely on.”
A BT Consumer spokeswoman said: “We understand that price rises are never wanted nor welcomed but recognise them as a necessary thing to do given the rising costs our business faces.
“Our price rises are annual, contracted and transparent and we make this clear when customers sign up or renew their contract. With the average price increase just above £1 per week in 2023, and some of our customers exempt from the rise, we’re also doing all we can to ensure our services are accessible to the widest group of customers possible through our market leading social tariffs.”
A TalkTalk spokesman said: “The preventable CPI-linked price rise in April 2023 was a direct result of Ofcom-regulated wholesale cost increases. In order to prevent the same thing happening next April, we are again calling on Ofcom to act and reduce the wholesale increases that lead to these price rises.
“These are exceptional circumstances, and families and business across the UK need the regulator to act.”