The UK government has warned mobile and broadband providers that it is not “right” for them to raise prices by more than 14 per cent from April, as customers contend with the surge in living costs.
Much of the fixed broadband and mobile and phone market has in recent years implemented price increases in April of each year for new customers and those already in contract. Telecoms groups tend to base rises on the previous year’s annualised rate of inflation, plus about 3.9 per cent.
According to official data on Wednesday, consumer price inflation was at 10.5 per cent in the year to December 2022, meaning most mobile and broadband tariffs will rise by an average of 14.4 per cent.
Michelle Donelan, the culture secretary, on Wednesday said: “At a time when families are struggling to pay their bills, imposing above-inflation price hikes is not the right thing to do.”
Donelan added that although operators were “investing billions to roll out better broadband”, she would “be writing to these companies to urge them to think before [increasing their prices]”.
The rises will follow scrutiny from regulators and politicians over telecoms companies’ transparency with customers — particularly those who are in contract — about future rises.
Several of the UK’s biggest telecoms groups boosted underlying revenue last year by lifting their prices by 3.9 per cent above inflation. BT and Vodafone have been open about their intention to do the same in April of this year.
Speaking at the company’s half-year results in November, Philip Jansen, BT’s chief executive, noted that the reason for the increases was “very, very simple . . . we are experiencing significant inflation”.
But Labour’s Lucy Powell, the shadow culture secretary, criticised the “eye-watering rises” set to be introduced and called on the government to “intervene urgently and stop . . . providers cashing in on broadband whilst families and firms struggle”.
BT, Vodafone, TalkTalk, Three and Community Fibre all now increase prices by the CPI inflation rate plus a variable amount. BT, Vodafone and Three add 3.9 per cent, while TalkTalk adds 3.7 per cent.
Virgin Media and its O2 brand base costs for mobile customers on the retail price index, which tends to be much higher than CPI, plus 3.9 per cent, although their rises will be based on annualised RPI data to January 2023.
Hyperoptic, a London-based broadband provider that has not implemented in-contract price rises, has accused rivals of not being transparent about mid-contract increases.
The company has pointed to research it commissioned early in 2022 that found about 60 per cent of people were unaware of forthcoming rises.
Ofcom has since opened an investigation into whether in-contract price rises were set out clearly enough by phone and broadband companies before customers signed up between March 2021 and June 2022. It has also started a new, separate probe into whether increases are adequately understood by customers.
The Committee of Advertising Practice, responsible for producing and upholding advertising codes, is consulting on new guidance that would compel operators to make price rises as prominent as the original price in promotional material “to avoid misleading customers”.
BT on Wednesday confirmed that its price rise would take effect from March 31. It said the average customer’s bill would increase by roughly £1 a week, adding that about 3mn customers on cheaper, “social” tariffs would not be affected.
TalkTalk, which has complained to Ofcom about the CPI-linked price rises implemented by the broadband wholesaler Openreach, said this year’s price rises were “preventable”.
Three said its “prices remain some of the most competitive in the market and this increase will allow us to continue to invest to ensure we have a strong network”.
Vodafone and Community Fibre did not immediately respond to requests for comment. Virgin Media O2 did not comment as their annual price rises will be determined by inflation data released next month.
