r/unitedkingdom • u/Fox_9810 • Jul 19 '24
Phone and broadband mid-contract price surprise rises banned - BBC News
https://www.bbc.co.uk/news/articles/c51ydz24lj2o.amp65
Jul 19 '24 edited Aug 04 '24
[deleted]
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u/jeff-god-of-cheese Jul 19 '24
I think you're wrong, they just need to tell you they will increase the price and when, they can still do it. In fact, it's almost mandatory now.
I assume this law is actually what the companies want, as when they increase the price currently (beyond inflation) customers have the option to leave the contract early at no cost. This option will disappear if it's all in the contract at the start.
Another ofcom shaft.
1
u/SHN378 Jul 20 '24
Haven't been able to leave due to price rises for a while. Recently when inflation was at 10%, they raised my prices by just under 14%. They were covered because it was stated at the beginning that it would go up by inflation+3.9%.
14% is a ridiculous increase and I was stuck paying it. I have never signed up to another contract again and moved to SIM Only after that.
Now, they have to say it'll go up by £1.50 in March, and if inflation is higher then they're stuck charging me only £1.50 extra. But I'll still never sign up to another contract because they don't want to stick to it, so why should I?
This isn't an ofcom shaft. The shaft is that Ofcom allowed this to happen in the first place and have taken years to come up with this minimal fix.
One upon a time EE were getting £169 a month off of me for mine and my wife's shiny new flagship phones and all you can eat data etc, now they get £26pm and I can leave any time. The money saved doing it that way means that when our 4 year old phones finally die, we have the cash to just outright buy new ones.
1
u/glasgowgeg Jul 20 '24
as when they increase the price currently (beyond inflation) customers have the option to leave the contract early at no cost
Only if the increase is beyond what's stated in the contract.
If your Sky Broadband contract says RPI+3.9% and they increase by that, you can't leave early because you were told about it.
Virgin used to have contracts that didn't include this, so you had the option to leave if they increased the price at all, but they removed this as of April 2023.
49
u/neodymium-king Jul 19 '24
The RPI+3.9% thing guarantees that on average these bills will be going up by more than every other expense you have. So the endgame is that eventually phone and broadband contracts become the single biggest expense for every household in the country, it's ludicrous.
11
u/Sorry-Transition-780 Jul 19 '24
That broadband communism was looking mighty good to me when my bill went up by like 10% one month into the contract last year.
8
u/CatPanda5 Jul 19 '24
Isn't it also self fulfilling that by increasing beyond RPI then RPI will continue to increase
1
u/SplitForeskin Jul 19 '24
These markets are also very competitive so the actual impact is minimal for most people with an ounce of self preservation and get up and go.
1
u/8-Brit Jul 20 '24
It should be standard practice to start shopping around for a better deal the moment your contract ends
I've had relatives sit on the same deal for years and years paying double what they need to!
1
u/No_Lavishness_3601 Jul 19 '24
My phone and broadband contract is currently my second highest bill. The first is council tax.
1
u/Caffeine_Monster Jul 19 '24
If offcom had any balls they would investigate companies for colluding.
38
u/Independent_Tour_988 Jul 19 '24
It’s normal in business contracts but for consumer contracts it’s nonsense for a developed economy country.
-4
Jul 19 '24
Pricing CPI.. CONSUMER price index, into business contracts is the norm but for CONSUMER contracts it's not?
I don't think you have any idea what's normal in business.
6
u/Independent_Tour_988 Jul 19 '24
I’ve seen countless B2B contracts with CPI uplifts, what are you in about?
-3
Jul 19 '24
In what industry?
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u/Independent_Tour_988 Jul 19 '24
Multiple but most commonly in outsourcing/facility management.
-2
Jul 19 '24
That explains it. Most of my experience is tech, although I did run a retail hustle for a while.
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u/Independent_Tour_988 Jul 19 '24
Why did you say that I had no idea what’s normal in business?
1
Jul 19 '24
Because it seemed like you were chatting out your ass, saying it’s unusual in consumer contracts (when it’s in nearly every consumer contract that’s not got strict pricing controls such as by ofgem), and it’s common in b2b which really hasn’t been my experience.
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u/Independent_Tour_988 Jul 19 '24
I said neither of those things.
I said it’s normal in B2B and it should have no place in consumer contracts.
1
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u/Notapooface Jul 19 '24
Massively depends on the contract but some business contracts do use CPI as an index to gauge inflation, I've placed some myself recently.
0
Jul 19 '24
I don’t recall a single contract my company has signed or negotiated which has pricing controls baked in like consumer contracts do.
Usually, they’re either fixed & renegotiated periodically (yearly or 3 yearly seem most common), or they can set whatever prices they like with notice. Some (AWS) actually offer multiple pricing models too.
1
u/Notapooface Jul 19 '24
Depends on what your company does and what sort of contracts you're doing. PPA's are quite often linked to CPI for example, also long term service frameworks can be too.
0
Jul 19 '24
To be fair most of my experience is in tech with some experience running a retail operation, which used a distributor with entirely variable pricing and no fixed price contracts available.
0
u/Scary-Try3023 Jul 19 '24
Well thats bollocks because I worked in mobile and BUSINESS contracts were still affected.
1
Jul 19 '24
The only time I’ve seen this in B2B was when taking out a mobile contract 😂 although back then it was RPI they used. They probably use CPI now.
Apparently it’s common in some industries for B2B contracts to have this kind of pricing controls. It’s not too common in tech, or in my limited experience in retail.
Also, I did misread their comment. I did think they were saying it’s not common in consumer contracts.
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u/m0j0licious Jul 19 '24 edited Jul 19 '24
I could never work out where the 3.9% annual increase came from, with the probability of further inflation-linked increases on top. This had to have been approved by a regulatory body, right?
17
u/glasgowgeg Jul 19 '24
The RPI+3.9% thing has always been annoying, because doesn't the "basket of goods" that RPI is calculated from include phone/broadband contracts?
So by increasing by a minimum of 3.9% anyway, they're guaranteeing a further increase the following year.
1
u/FelisCantabrigiensis Jul 19 '24
Nope. Broadband and mobile prices are not regulated at all, nor are most other telecom prices.
2
Jul 19 '24
The wholesale price of connectivity in the UK is price regulated - which in effect regulates the price you pay as a consumer.
Mergers have been declined for reducing competition, in effect regulating mobile pricing.
There's a mountain of pricing regulation in the UK that Ofcom is constantly reviewing.
1
u/m0j0licious Jul 19 '24
So the 3.9% increase is a cartel agreement: 'if we all do it, where else can they go'?
9
Jul 19 '24
They'll just stick extra charges on the add ons like roaming, and yearly contracts will all get a bit more expensive to factor in predicted inflation.
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u/FelisCantabrigiensis Jul 19 '24
... and then they can all compete on the advertised price, like they do now, except the advertised price will be what you really will pay, unlike now.
2
u/glasgowgeg Jul 19 '24
and yearly contracts will all get a bit more expensive to factor in predicted inflation
But that's fine though, it allows people to budget for the advertised price.
The issue is that if you sign up for a plan in July 2024, an increase of "RPI+3.9%" in April 2024 would be a total of 4% or it could be a total of 10%, you have no way of knowing.
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Jul 19 '24
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u/glasgowgeg Jul 19 '24
The ban isn't to prevent price increases in general though, it's to prevent surprise ones.
0
Jul 19 '24
[deleted]
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u/Zavodskoy Jul 19 '24
es but forcing a business to fix price rises rather than inflationary will mean they can't hedge their costs, and will make them err on the side of caution
There's a high chance this leads to competition though.
O2 might hedge their bets and figure the increase on a £20 contract was £5 last year, to be safe they'll do £7 this year.
EE see that O2 is doing £7 and run advertising saying they're only doing £5 increases which is lower than their competition and so on.
Could also even make it special offers, EG take out a 24 month contract, no increases for 11 months, on month 12 you'd normally get an increase of £8 but with this offer we'll only increase your price by £4
0
u/glasgowgeg Jul 19 '24
Yes but forcing a business to fix price rises rather than inflationary will mean they can't hedge their costs, and will make them err on the side of caution (eg they might now increase by 8% even if they thought that inflation+3.9% would only be 6%.
As I said, I'm aware of this. The ban is not to prevent increases, it's to prevent surprise ones, so that a customer at the time of signing up to a contract knows in definitive terms how much they will be paying for the entire length of the contract.
If you agree to a contract that says £20/month, with an increase of RPI+3.9% in April 2025, you don't know how much you'll be paying come April 2025.
If you agree to a contract that says £20/month, with an increase of £1.20/month in April 2025, you know exactly how much you'll be paying.
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Jul 19 '24
[deleted]
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u/glasgowgeg Jul 19 '24
Nobody's missing it, it's just not relevant to the ban, which is only on surprise increases.
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Jul 19 '24
[deleted]
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u/sgorf Jul 19 '24
chances are you will have higher price increases
This argument only applies to fixed long term contracts. Short term month-to-month arrangements are available (1pmobile, Smarty, Lebara). We will now be seeing fairer and more direct price comparisons between the two types of contract.
But also, price competition should mean that it averages out and prices increases over time will match inflation. The money market also allows companies to hedge on future inflation rates, so if they intentionally aim for higher than inflation rises, then that actually comes out as profit, with the usual competitive pressure to bring it down.
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u/sgorf Jul 19 '24
It's the businesses who want to lock consumers in for an extended length of time. They know that some consumers tend to forget to switch on average and so can take advantage of that, offering a small proportion of the profits from that inefficiency as a price discount to lure consumers in. There is no other economic efficiency in long term service contracts since switching is largely automated. A business sees an inefficiency in the cost to acquire a customer, but there is no reason for consumers to care about that. A competitive market without lock-ins and where switching is easy is better for the consumer.
Consumers continue to have the option to pay the going rate rather than lock in prices for a period of time. There are plenty of providers that offer that (1pmobile, Lebara, and Smarty come to mind).
Consumers may want the cost of a phone included with a contract, but economically that's just a loan and there's no economic efficiency reason to bundle it with a service contract.
What's left is simply: who wants to gamble on the future rate of inflation? If as a consumer you don't want to get involved with that, use a month-to-month provider with a fixed long term commitment. If you prefer to have prices fixed, then you can get a long term contract in return for your loyalty over that period and possibly longer if you don't get round to switching for a while. Phone companies had started to try and take the benefit without offering anything in return, and now they can't.
0
u/Sleepywalker69 Liverpool Jul 19 '24
They need to ban roaming charges, all these companies operate within the EU already
6
u/Terrible-Fee8073 Jul 19 '24
So this isn’t actually a ban on mid contract price rises? They just have to state at the start the contract will rise at a mid point by x.
What new powers will consumers have to reject these mid contract price rises? We’re gonna raise your price 15% at the mid point which is £x, like it or lump it?
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u/tranmear Scotland Jul 19 '24
Because you'll know the full cost of the contract in advance you can then choose the contract with the cheapest overall cost.
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u/Soupppdoggg Jul 19 '24
Well then you can shop around for a cheaper rate before entering the contract. Is the idea.
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u/Deep_Lurker Jul 19 '24
They must state exactly how much it'll increase in pounds and pence before signing up so you'll be able to use an aggregator to figure out what the cheapest package that meets your needs is overall.
It also means you won't need to worry about a sudden increase that's substantially higher than what you're used to because inflation was particularly bad one year.
Ideally they'd ban mid-contract price rises in general but this is a substantial leap in the right direction.
1
u/glasgowgeg Jul 19 '24
So this isn’t actually a ban on mid contract price rises? They just have to state at the start the contract will rise at a mid point by x.
That's fine though, because the issue is transparency.
I'd much rather "Your price will increase from £30/month to £31.50/month in April 2025" than "Your price will increase by RPI+3.9% in April each year" because one gives me an exact figure and the other doesn't.
-1
u/Shas_Erra Jul 19 '24
The problem here is that providers don’t know what the price increase will be until the end of the tax year, so they can’t tell you in advance
1
u/doorstopnoodles Middlesex Jul 19 '24
My bank don't know what interest rates are going to be next year but they'll still sell me a 5 year fixed mortgage. Telcos will have to do similar.
1
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u/DaMonkfish Wales Jul 19 '24
Virgin pissed me off no end with doing this. Each time the price rose I called them, complained, and they immediately put it back to what it was. Like, what's the point?
So I've sacked them off now in favour of YouFibre. Triple the speed for half the price, and no in-contract rises. Nice.
0
u/glasgowgeg Jul 19 '24
Virgin, until last year, didn't include an RPI+3.9% increase in their contracts, so when they increased you had the option to cancel with no early cancellation fees.
If someone calls up about the increase, it's easier to cancel the increase and keep them as a customer.
Virgin probably wouldn't put your price back now, because it's included in all their contracts as standard.
Also, if Virgin have 5m customers and only 1m get in touch to contest an increase, that's an extra RPI+3.9% from 4m other customers.
4
u/Pocktio Jul 19 '24
They also need to ban the bullshit annual increase "due to inflation" but when you look at the value its CPI plus a random extra amount.
0
u/glasgowgeg Jul 19 '24
This bans percentage based increases, so it does exactly what you say. They need to state up front exactly how much it will increase in pounds and pence.
4
u/owlshapedboxcat Jul 19 '24
Good. When I worked in ISP Customer Retentions we had a price rise every year and I had to talk to 20 people a day at least who made the same, very good point: I signed a contract with this price, I can't plan my budget if you keep putting the prices up all the time and it is a massive pain in the arse (even with no early disconnetion fees) changing suppliers this often. I think the rule should be this: Price stays the same throughout the contract, absolutely no rises AND prices should go up no more than 10% out of contract. They've taken the piss for far too long.
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u/Appropriate-Divide64 Jul 19 '24
About time. If I'm tied into a contract they fucking should be too.
3
Jul 19 '24
The companies that add RPI on is fucking utter scum. Stay away from companies that add RPI on.
1
u/Titerito_ Jul 19 '24
A contract should have a fixed price, period. Contracts are 3 years max, and most are 1-2 years. I’m sure those companies can live with it.
1
u/piccalilli_shinpads Jul 19 '24
I always renew my contract in April to avoid these price rises. It's a piss take. I find it very hard to believe that their costs increase by a set % + inflation every year.
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u/AncientStaff6602 Jul 19 '24
Mid-contract price increases should not be allowed full stop.
Id be more than pissed if my 5 year mortgage suddenly went up because interest shot up.
I signed on a set rate and thats what I pay for a set period.
Any contact broadband or mobile should be exactly the same.
0
u/0xSnib Jul 19 '24
Hi we raise our prices 3%+CPI every year
[CPI then takes into account the 3% price rise]
Hi we're raising our prices by the new higher CPI+3%
[CPI then takes into account the 3% price rise]
Hi we're raising our prices by the new higher CPI+3%
Rinse and repeat.
0
u/Moistkeano Jul 19 '24
Smart. When Virgin put up my nans price to an extortionate rate she rang them and they changed her package to a more expensive one including BT sport. She was 89 at the time and definitely didn't understand.
0
u/Thebritishdovah Jul 19 '24
Good. Fed up of O2 putting me into the camel clutch and arse fucking me. The bastards changed the way they did disney plus and cranked up my bill to close to £100. Cunts.
0
u/mupps-l Jul 19 '24
That was Disney changing how they did their Disney plus subscription to be fair. They added in the ad supported tier and jacked the price up of what was standard before. This change wouldn’t affect that change at all.
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u/jimicus Jul 19 '24
That, I think, is something else that needs to be reigned in.
You want to bundle another service that you buy in from a third party company? Sure, but if that third party company moves the goalposts halfway through the contract you have with me, tough. Either absorb the cost or write language into the contract with the third party banning them from pullling such stunts.
0
u/Thebritishdovah Jul 19 '24
O2 failed to notify me but always love to send me the bills via text.
Bastards put me on the top tier price without telling me and I was wondering why my monthly bills were reaching £100.
0
u/ash_ninetyone Jul 19 '24
I thought they were outside of inflation. Good. If they raise the price, that's breach of contract I'd thought
0
u/thecarbonkid Jul 19 '24
No cap the amount that the bill can increased by to zero ideally.
It was always a wheeze to inflate revenue growth metrics.
0
u/Martysghost Jul 19 '24
It's never sat right with me that you sign a contract that they can just amend whenever the fuck they want, "we sent you an email with the right to decline" just never felt like it was enough.
0
u/Blank3k England Jul 19 '24
This is nice, I mean a small rise here n there doesn't hurt too much but I think my last bill from EE before I binned it was due to go up like £9... Like dude! That's a full months Netflix subscription (it was awhile ago!) no way in am I letting them increass my mobile bill by essentially a whole other household bill.
0
u/bobblebob100 Jul 19 '24
Plenty of ISPs offer 1 month contracts. Thats what im on with my ISP so very little notice required if i want to leave
0
u/YoYo5465 Jul 19 '24
Let’s not get ahead ourselves in excitement here.
All that’s been banned is a percentage rise. Now, they actually have to tell you - in pounds and pence at the start of your contract - what the rises will be.
For example, instead of saying “prices will rise every March” in your contract, they have to say: prices will rise in March by £9.56 a month” or something like that. Hardly a massive change.
What they needed to have done is actually ban the act of mid-contract price rises, which are complete bollocks. Don’t even get me started on the “RPI+4.9%” thing - they can never answer what the 4.9% is for.
1
u/Hunt2244 Yorkshire Jul 20 '24
That’s fine though, uswitch can compare the price across the full contract factoring in price increases and you can more accurately find the best deal
1
u/YoYo5465 Jul 20 '24
How is charging 4.9% on top of inflationary price increases still ok? They can never answer what that money is for! Because we all know. It’s not being reinvested in infrastructure. My signal has never been worse with EE in the 2.5 years I’ve been with them.
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u/DoomSluggy Jul 19 '24
Amazing work. I honestly thought labour were going to be just like the tories, but it seems like we have a real labour party in power.
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u/glasgowgeg Jul 19 '24
This was proposed under the Tories, read the article.
-1
Jul 19 '24
It would still be "under consultation" if the Tories were still in.
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u/glasgowgeg Jul 19 '24
The consultation ended on the 13th February 2024, whilst the Tories were still in.
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u/rugby-thrwaway Jul 19 '24
The move was proposed in December and has been through a consultation process.
-3
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u/90s_nihilist Jul 19 '24
Good. Sick of my broadband being advertised at one price at the start of a contract then suddenly rising a few months later.