The UK’s biggest telecoms providers are lining up above-inflation price increases for broadband and mobile customers that will add almost £500m to consumers’ bills from next spring, according to a new estimate.
BT, EE, Vodafone, Virgin Media O2 and TalkTalk are to increase bills for more than 22 million broadband and mobile phone customers under “mid-contract” price rise clauses from April and May next year.
The practice, which is not allowed in other utility sectors such as electricity and gas, involves increasing bills by using either the consumer price index (CPI) or retail prices index (RPI) measures of inflation, and then adding almost four more percentage points on top of the official rate.
Research by the consumer group Which? estimates that telecoms firms will generate £488m from the 2024 mid-contract price rises, which will be set based on the inflation figures for December, released in January.
The rate of inflation fell to 4.6% in October, compared with a CPI rate of 10.5% and RPI rate of 13.4% last December, but two years of steep bill increases will hit cash-strapped households. Which? based its calculation on Bank of England forecasts of 4.5% CPI inflation in December, and the Office for Budget Responsibility’s prediction of 6.5% RPI inflation for the same month.
Which? and Citizens Advice have written to the telecoms regulator, Ofcom, calling for a ban on mid-contract price rises as part of its review of the practice that it launched in February.
Which?’s director of policy and advocacy, Rocio Concha, said: “It is absolutely unacceptable during the most severe cost of living crisis in decades. Ofcom should ban the unpredictable price rises and give people certainty about exactly how much their contract will cost when they sign up.”
For the next round of price rises BT, which owns EE and Plusnet, and Vodafone will add 3.9 percentage points to the rate of the December CPI. TalkTalk will add 3.7 percentage points.
Virgin Media O2 is to add 3.9 percentage points to the December rate of RPI, which is typically several percentage points higher than the CPI rate, across its broadband and mobile businesses.