Ofcom to review inflation-linked telecoms price rises

Ofcom has launched a review to examine whether inflation-linked, mid-contract price rises give phone and broadband customers sufficient certainty and clarity about what they can expect to pay.

Ofcom’s preliminary research has found that around a third of mobile and broadband customers do not know whether their provider can increase their price. Among those who do know their provider can increase their price, around half do not know how this would be calculated. And nearly half of all customers do not know what CPI and RPI measure. The review will examine these issues in detail to see whether tougher protections are needed. This review will look specifically at the practice of in-contract price rises linked to inflation and percentage changes, which a number of telecoms firms introduced in 2021.

General consumer law does not prevent companies from increasing their prices during the contract period, provided they do so fairly. Many – but not all – telecoms firms choose to do this. Some give customers 30 days’ notice and the right to exit penalty-free. Others specify price rises in customers’ contracts from the start. Ofcom has strict rules in place that mean providers who specify price rises in contracts must make this clear before customers sign up. In December, Ofcom launched a separate enforcement programme into whether companies have been sticking to this.

At a time when household finances are already under significant strain, it is vital for customers to have sufficient certainty about the prices they will pay over the course of their contract. Even for those who do understand inflation and are aware of its current level, it is not possible for them to know what it will be in the future. Ofcom needs to take a closer look at these issues to consider whether they need to intervene to ensure customers have greater certainty and clarity, from the outset, about the prices they will pay over the duration of their contract. Ofcom is expected to publish our initial findings later in the year.