Millions of mobile and broadband customers in the UK face potential price increases on their contracts within days, due to new regulations implemented by Ofcom, the telecoms regulator. These regulations, effective from January 17, mandate telecom companies to clearly display mid-contract price rises in pounds and pence, rather than as percentage increases linked to inflation. While initially intended to provide greater transparency and protect consumers from unpredictable inflation-driven hikes, the new rules may inadvertently disadvantage some customers on cheaper contracts.
Historically, telecom companies increased prices annually, typically in April, based on inflation rates (CPI or RPI) plus an additional percentage, often up to 3.9%. This often resulted in substantial increases, particularly during periods of high inflation. Under the new structure, companies will cap these increases, generally between £1 and £3 per month for broadband and slightly lower for mobile contracts. However, this fixed-pound increase, while seeming straightforward, could be proportionally higher for users on lower-priced plans than the previous inflation-linked percentage increases would have been, especially with current inflation being relatively low.
The discrepancy arises because a fixed-pound increase represents a larger percentage increase on a smaller base price. For example, a £3 increase on a £25 broadband package is a 12% rise, whereas the same £3 increase on a £60 package is only a 5% rise. This effectively means that customers on entry-level packages, often those from lower-income households, could bear a disproportionately higher burden. Consumer experts have raised concerns about this “unfair” impact, particularly as many eligible low-income households remain unaware of existing cheaper social tariffs.
Ofcom, while acknowledging the potential for short-term discrepancies, defends the new regulations, emphasizing the long-term benefits of price certainty and transparency. They argue that the previous percentage-based increases exposed customers to the volatility of inflation, which can fluctuate significantly. By providing a fixed-pound figure upfront, Ofcom aims to empower consumers to compare deals effectively and choose the best option for their needs, without the uncertainty of future inflation-driven price hikes.
Several major telecom providers have already announced their pricing strategies in line with the new regulations. BT, EE, and Plusnet have confirmed fixed monthly increases, with exemptions for vulnerable customers on social tariffs. Vodafone, TalkTalk, and Three have also outlined their price increase plans within the Ofcom framework. While these fixed increases provide predictability, consumers are urged to carefully evaluate their usage patterns and compare available deals to ensure they are getting the most value for their money.
Consumers seeking to minimize their telecom costs are advised to regularly review their contracts and explore available options. Switching providers often yields the most significant savings, but penalties for breaking existing contracts might outweigh the benefits. Comparing deals across different providers using comparison websites like MoneySuperMarket and Uswitch can help identify the most competitive offers based on individual usage needs. Haggling with existing providers is also an option, particularly when armed with knowledge of competitor offers. Finally, exploring social tariffs, designed for those receiving specific benefits, can significantly reduce costs for eligible households. Ultimately, proactive engagement and informed decision-making are crucial for consumers navigating the evolving telecom landscape and securing cost-effective services.
