Ofcom bans mobile phone and broadband companies from hiking prices mid-contract

New rules will force companies from next January to be upfront with their customers about any price rises included in their contract

Telecoms watchdog Ofcom has banned mobile phone, broadband and pay TV providers from linking prices to high inflation figures in the middle of a customer’s contract.

The new rules will force companies from January next year to tell their customer in pounds and pence about any price rises included in their contract – and they must do this at the point of sale and be clear about when any price rises will happen.

Many major phone, broadband and pay TV companies currently link their price rises to future interest rates, saying that increases will be ‘inflation plus 3.9%.’

That ‘unfairly’ puts the burden of shouldering inflation costs onto customers, Ofcom said. With mobile and broadband customers being hit with mid-contract rises that were difficult to predict when taking out contracts. 

But this still leaves the door open for mid-contract price rises.

Alex Neill, co-founder of Consumer Voice, said:

‘Everyone knows people don’t read the fine print at the best of times so being clear about mid-contract prices rises upfront is better than expecting people to dig through the tiny text to find the sneaky terms.

‘And annual monetary price increased are clearer than percentages, but advertised fixed price deals should mean fixed.’

Today’s announcement is confirmation of rules that the regulator said it was looking at in December last year.

Millions of customers on contracts subject to mid-contract price rises

Ofcom estimates that around six in ten broadband and mobile customers were on contracts subject to inflation-linked price rises, as of April 2024.

Yet, a survey of 4,232 UK adults from the regulator found that more than half of broadband customers (55%) and pay monthly mobile customers (58%) do not know what inflation rates such as CPI and RPI measure.

And very few broadband customers (16%) or mobile customers (12%) who are with providers that use inflation-linked price rises were both aware of the price rise and able to identify that it was inflation-linked with an additional percentage.

The regulator found that even when people do consider future inflation-linked price rises when choosing a contract, they often do not understand them fully and find it difficult to estimate what the impact could be on their payments.

Ofcom telecoms policy director Cristina Luna-Esteban said: ‘With household budgets squeezed, people need to have certainty about their monthly outgoings.

‘But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.

‘We’re stepping in on behalf of phone, broadband and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily and take advantage of the competitive market we have in the UK.’

Competition is ‘keeping prices down’

The regulator has found that, over the last five years, average prices for broadband and mobile services in the UK have fallen.

It said the average superfast broadband bundle price was £48.71 in 2018 and is now £42.28 – and with better availability, download speeds and data deals. The average monthly mobile price (excluding handset costs) was £17.12 in 2018 and £11.51 in 2023.

Ofcom says this is a result of the UK’s competitive telecoms markets, in which providers set their own prices. It says its job is to ‘make sure consumers can shop around with confidence and take advantage of this.’

Under our current rules, if mobile phone and broadband providers fail to make price rises in contracts clear to customer when they sign up, they must give customers one month’s notice and the right to exit penalty-free when they increase prices mid-contract.

UK’s top mobile phone companies in £3.3bn lawsuit over ‘loyalty penalties’

The UK’s four biggest mobile phone companies have, however, been accused of ‘exploiting’ loyal customers on up to 28.2 million mobile phone contracts.

Justin Gutmann, a former Citizens Advice executive, and law firm Charles Lyndon claim that Vodafone, EE, Three and O2 have been abusing their market dominance by charging a ‘loyalty penalty’ that has left customers paying significantly more than new customers for the same services.

The class action was been filed with the Competition Appeal Tribunal in December. The competition court will consider whether to grant permission for the claims against these companies to go to trial at a hearing on 31 December 2025.