For more information see our Privacy Policy. Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. Telecoms operators say they have to push through big increases to cover their own soaring costs. In September, Ofcom said a record 8m UK households were facing problems paying mobile, broadband, pay-TV and streaming bills. “We currently enjoy some of the lowest telecoms prices in Europe while also rolling out new infrastructure at record speed, but prices and the cost of living must be our priority.” Michelle Donelan, the secretary of state for the newly formed Department for Science, Innovation and Technology, said: “I brought together bosses from across the telecoms industry and urged them to reconsider increasing prices above inflation during this difficult period. This follows a separate investigation into the sales practices of telecoms operators, and another by the UK advertising watchdog into whether companies are misleading consumers with their marketing. Consumers are expected to face more than £2bn in additional charges this year. The figures come as the telecoms regulator Ofcom investigates the widespread practice of mid-contract price rises. If the UK’s biggest broadband and telecoms companies were to limit their increases to the level of inflation, scrapping any rise above that, British consumers could save an estimated £600m-plus on their annual bills.
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However, from next year Virgin Media O2, the parent company of both brands, intends to roll out the RPI plus 3.9 percentage point mechanism across its entire TV and broadband business, not just the mobile phone arm. The company said the real increase would be closer to 9-10% as it applied to calls and data only, not the significant cost of payments for handsets that are part of bills. Given RPI in December was 13.4%, a typical customer could be facing a 17%-plus annual rise. This week O2 will reveal the scale of its price rise, which is based on January’s RPI plus 3.9 percentage points. Virgin Media is pushing through an average 13.8% rise, although customers will have a month to decide whether they want to leave. Many firms are set to increase prices above inflation, with some adding up to 3.9 percentage points on top of the official rate.īT and Vodafone add 3.9 percentage points to the rate of the December CPI. Some telecoms providers also use the retail price index (RPI) measure of inflation, which is typically higher. Official figures on Wednesday are expected to show that inflation fell to about 10.2% in January, although it will remain among the highest rates in four decades. With the consumer price index (CPI) measure of inflation at 10.5%, charities are warning that millions of people will face unaffordable price increases this spring.
The telecoms firms use a range of methods to ratchet up the annual cost of bills to take account of inflation part way through an agreed fixed term, in a practice not allowed in other utility sectors such as electricity and gas.
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