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Major broadband provider with one million customers to axe ‘sneaky’ price hikes from today
Watch our video to see how you can slash your mobile bill
A MAJOR broadband provider with one million customers is to axe "sneaky" mid-contract prices hikes from today.
Plusnet, part of the BT Group, has said it will no longer raise prices mid-contract based on a percentage linked to inflation.
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Prices can still go up, but instead, they will be expressed in pounds and pence, giving customers a clearer idea of how much more they might pay,
The move comes ahead of plans by regulator Ofcom to bring in rules making this compulsory for all providers.
It plans to ban mid-contract price increases that aren't set out at the point of signing up from October 2024.
Plusnet will start showing rises in pounds and pence from now on, instead of percentages for customers so they are less unpredictable.
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It will apply mid-contract charges at a flat rate for all customers, which is a yearly increase of £3 per month.
Out-of-bundle services will be subject to an annual 5% increase.
For example, from now, if a customer has a new broadband contract at £30 per month, their price from March 31, 2025 will be £33 per month and £36 per month from March 31, 2026.
A Plusnet spokesperson said: "We have introduced a pricing model aligned with Ofcom’s approach, offering our customers a predictable long-term view of their contract terms.
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"These new contracts will make it simpler for our customers and provide more certainty on what annual price changes will be.”
In March, the firm increased prices by the CPI inflation plus 3.9%.
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As the inflation rate can vary from one month to the next, it means it's unclear for customers exactly how much that rise is until confirmed.
In Plusnet's case, the rise was based on December's inflation data which was released in January.
Inflation was 4% which means the bills increased by 7.9% at the end of last month.
Ernest Doku, telecoms expert at Uswitch, said: "Uswitch welcomes the greater clarity given to consumers by Plusnet’s decision to change to a ‘pounds and pence’ model for future mid-contract price increases.
"The new model provides certainty when it comes to the cost of your contract and makes it easier for customers to manage their finances.
"This move aligns with parent company BT who were the first provider to announce the new approach to mid-contract price rises earlier this year, followed by Vodafone more recently."
BT and EE announced it would be making the change back in April.
Plus, Vodafone has said it will no longer apply inflation-linked price rises for consumers and some small business customers.
How to save on your mobile phone bill
NOT happy with your current mobile phone deal?
If you’re outside the minimum term of your contract then you won't need to pay a cancellation fee - and you might be able to find a cheaper deal elsewhere.
But don't just switch contracts because the price is cheaper than what you're currently paying.
Take a look at how many minutes and texts, as well as how much data you're using, to find out which deal is best for you.
For example, if you're a heavy internet user it's worth finding a deal that accommodates this so you don't end up spending extra on bundles or add-ons each month.
Also note that if you're still in your contract period, you might be charged an exit fee.
Ready to look elsewhere? Pay-as-you-go deals are better for people who don’t regularly use their phone, while monthly contracts usually work out cheaper for those who do.
It's worth using comparison websites, such as MoneySupermarket and uSwitch.com, to compare tariffs and phone prices.
Billmonitor also matches buyers to the best pay-monthly deal based on their previous three months of bills.
It only works if you’re a customer of EE, O2, Three, Vodafone or Tesco Mobile and you’ll need to log in with your online account details.
There's also MobilePhoneChecker, which has a bill monitoring feature that recommends a tariff based on your monthly usage.
If you’re happy with your provider then it might be worth using your research to haggle a better deal.
New rules are on the way
Ofcom announced last month that firms will soon be ordered to clearly state any proposed price rises during fixed contracts in pounds and pence.
The regulator is seeking to ban firms from including any inflation-linked or percentage-based price rises on all new contracts.
If current plans go ahead, the new rules, which Ofcom has consulted on, should come into effect by October.
Ofcom chief executive Dame Melanie Dawes said: "At a time when household finances are under serious strain, customers need prices to be crystal clear.
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"But most people are confused by the unpredictability and complexity of inflation-linked price rise terms written into their contract, which undermines customers' ability to shop around.
"Our tougher protections would ban this practice once and for all, giving mobile customers the clarity and certainty that they need to secure the best deal to suit their needs and budgets."
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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