Broadband and mobile customers count the cost of April price hikes three times inflation

Millions of broadband and mobile customers are facing another year of above-inflation price rises, with the major providers having pushed through increases of up to £4 a month in April. For many households, the rises represent an effective jump of well over ten per cent on a typical deal, far outpacing the general rate of inflation.

The increases follow a significant change to the rules governing how telecoms firms can raise prices mid-contract. Where companies once buried inflation-linked formulas in the small print, they must now spell out any rise in pounds and pence at the point of sale, a shift intended to make costs clearer but which has done little to soften the blow.

Consumer experts say the confusing patchwork of old and new contract terms means many customers do not realise how much extra they are paying, nor that they may be able to leave for a cheaper deal without penalty.

Who is putting up prices

The scale of the rises varies by provider. Major broadband firms including BT, EE, Plusnet and Virgin Media applied increases of around £4 a month from April, while Sky raised prices by about £3 and Vodafone by around £3.50. On a typical broadband deal of around £22 a month, a £4 rise amounts to an increase of roughly eighteen per cent.

Mobile networks have moved to similar fixed annual increases, though many have adopted a tiered approach so that customers on cheaper tariffs face smaller rises than those on premium plans, a structure designed to spread the pain more evenly.

“Stating a rise in pounds and pence is more honest than hiding behind an inflation formula, but it does not change the fact that prices are going up by far more than inflation. Customers should not simply accept it.”

A two-tier system

The new pounds-and-pence rules apply only to contracts signed after the rule change, leaving a large number of customers still tied to legacy deals based on the old inflation-linked formulas. These older contracts typically rise by a measure of inflation plus an additional percentage, an arrangement consumer groups have long criticised as opaque and unfair.

The result is a confusing two-tier market in which two households on near-identical packages can face very different increases depending purely on when they happened to sign up, making it harder than ever for customers to know whether they are getting a fair deal.

• BT, EE, Plusnet and Virgin Media raised prices by around £4 a month from April.
• Sky increased by about £3 and Vodafone by roughly £3.50 a month.
• A £4 rise on a £22 broadband deal is an increase of around 18 per cent.
• New contracts must state rises in pounds and pence; older deals use inflation formulas.
• Many customers may be able to leave or haggle without paying an exit fee.

How to fight back

Experts urge customers to treat the annual price rise as a prompt to act rather than a fait accompli. Those out of contract can switch freely, and even those still tied in may be able to leave penalty-free if their provider failed to make the rise clear at sign-up. Haggling, too, frequently yields a better deal, with providers often willing to match rivals to retain a customer.

Switching services and price-comparison tools make it straightforward to see whether a better tariff is available, and customers approaching the end of a contract are typically in the strongest position to negotiate or move.

“The single best thing you can do is pick up the phone when your price goes up. Tell them you are thinking of leaving, and more often than not a better offer appears. Loyalty is rarely rewarded in telecoms.”

Background

Mid-contract price rises became a flashpoint during the cost-of-living crisis, when customers who had signed up at one price found their bills jumping by double-digit percentages as inflation soared. The regulator responded by banning inflation-linked and percentage-based rises in new contracts, requiring firms instead to state any increase as a fixed sum at the outset.

Critics argue the reform, while well-intentioned, has in some cases simply allowed providers to bake in generous fixed increases that still comfortably exceed inflation, leaving consumers little better off.

What happens next: with the new fixed-rise model now embedded, attention turns to whether competition and switching keep a lid on prices. Customers are advised to diarise their contract end dates and review their deals annually, as the savings from switching or haggling can run to well over £100 a year.