Consumers would have new rights to pull out of phone and broadband contracts if providers increase prices on fixed deals, under new proposals.
Ofcom, the communications regulator, has today announced a consultation on how to protect customers from price rises during fixed contracts for landline, mobile and broadband services.
It said its proposal would allow communications providers to increase prices during a fixed-term contract but leave consumers free to leave if they did not want to accept the rise.
Ofcom recieved 1,644 complaints between September 2011 to May last year, finding that many consumers believed they were not made aware of the potential for price rises in what they believed to be fixed contracts.
"Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts," said Claudio Pollack, consumer group director at the watchdog.
"Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises."
From January 5, BT customers will see the price of their landline and broadband rise by 5.9pc, more than twice the rate of inflation.
The steepest price rises come for BT's Vision customers, who pay for television channels, and will see the monthly charge rises from £4 to £5, an increase of 25pc.
The hikes, which take effect on 5 January 2013, will be the fourth set of rises the telecoms giant has implemented in just over two years.
But it is not just BT customers who will be facing steeper charges. The vast majority of Virgin Media's 4.2 million customers will see the price of line rental going up by £1.09 on February 1, from £13.90 per month to £14.99 per month, a rise of 3.4pc.
While seven million O2 customers will see their monthly mobile bills rise by 3.2pc for 7 million of its customers. The rise will add £13.44 annually or £1.12 per month to a £35 monthly bill and affects existing customers, including those who have recently taken out a new deal.
Under current Ofcom rules, due to communications providers small print, customers are only able to get out of their contracts in certain limited situations for example, if someone can show the changes being made will increase their total charges by more than 10pc, based on their recent usage.
In other words, under the current system, the only fixed part of the contract is the length. Providers are within their rights to raise your tariffs and the majority of consumers are powerless to do anything. But this could change in the coming months.
The regulator said that under the new proposals it would also expect providers to be transparent about the potential for price increases so consumers could make an informed choice when entering the contract.
It said it had also considered a complete ban on price rises during fixed contracts but believed this would be inconsistent with European laws.
Richard Lloyd, executive director at consumer group Which?, said: "The day when fixed must mean fixed in contracts is another step closer.
That's a good start to the New Year for the 38,000 people who supported our complaint to Ofcom about the giant phone companies hitting hard-pressed consumers with millions of pounds worth of unexpected price increases.
The mobile phone companies should see the writing on the wall, bring in these changes now and start playing fair with their customers without waiting for the regulator to rewrite the rules."
The consultation closes on 14 March 2013 and Ofcom expects to publish a decision in June 2013.
[Related link: Compare phone deals]