BILL HIKE
Mobile and broadband bills to go up by 13% after inflation-busting price hikes despite new rules
Plus, we've explained how to cut your telecom costs now
MILLIONS of mobile and broadband customers are set to face price hikes of up to 13% this year, despite the introduction of new rules designed to protect consumers.
Virgin Media, O2, and Vodafone are expected to confirm the exact increases to customer bills next week.
These changes follow Ofcom's new regulations, which require telecom companies to display mid-contract price rises in pounds and pence, replacing the previous system of linking price hikes to inflation.
Under the updated system, Vodafone mobile customers who signed up for a new contract on or after July 2 will see their bills rise by £1.80 per month, while broadband customers will face an increase of £3.
Virgin Media customers will see their monthly bills rise by £3.50 from April, but only if they signed up for a new service on or after January 9.
Similarly, O2 customers with airtime plans will see a £1.80 monthly increase, provided they took out a new contract after the same date.
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For the majority of customers who signed up before these cut-off dates, inflation-linked price increases will still apply.
However, this could result in smaller rises for some, as inflation rates have eased compared to previous years.
Richard Neudegg, director of regulation at Uswitch.com, said: "Recent rule changes for mobile and broadband mid-contract price rises apply to those taking or renewing contracts, so a large proportion of consumers can still expect to be hit by as-yet-unknown price hikes which they will only find out about on February 19.
"Many older contracts still have price increases based on January's inflation rate, plus an additional 3.9%."
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While the introduction of fixed price hikes aims to make costs clearer it means that customers on the cheapest tariffs could end up paying more under the new system.
This is because many providers are implementing fixed increases that are higher than current inflation rates, which are hovering around 2-3%.
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For example, Vodafone was one of the first providers to announce and apply their changes to all new contracts taken out from July 2, 2024.
This means customers who took out a new contract after this date will have price rises communicated in pounds and pence.
Those who took out a deal with them beforehand will still be subject to inflation-linked price rises and won’t know the exact amount they will be paying until February 19.
In many cases, the fixed pounds and pence increase results in a higher percentage rise than applying the current inflation rate of 2.5% (CPI) + 3.9% (6.4%) or 3.5% (RPI) + 3.9% for O2 customers.
For example, a £15 Vodafone SIM-only plan will jump by 12% to £16.80 under the pounds and pence model, versus a likely 6.4% increase under the old system.
This trend of steeper increases under the fixed-price system is also evident across the broadband industry.
For example, Virgin Media customers on the £25.99 a month plan face an 12% increase under the fixed-price model, compared to a potential 7.4% rise under the previous system which uses RPI.
This will mean that somebody taking out a contract now will see their bill rise to £29.49 a month, instead of £27.91 under the old method.
With CPI inflation now down to 2.5% and RPI hovering at 3.5%, Andrew Ferguson, editor of thinkbroadband.com, says that the shift from complex CPI plus percentage-based increases to straightforward pounds and pence rises may not be the boon it seems.
He argues that while inflation remains low, those on the cheapest contracts will be penalised the most by the new pounds and pence price hikes.
This discrepancy means that those on entry-level broadband or mobile contracts, often individuals from lower-income households, could end up paying more proportionally than those on premium packages.
INFLATION-LINKED PRICE HIKES
TELECOM firms have come under fire for above-inflation mid-contract price rises on fixed contracts for the past four years.
Due to clauses in contracts, providers can impose annual rises, usually in April.
The hikes are tied to either the Consumer Price Index or Retail Price Index inflation rate, which has soared during the cost-of-living crisis.
It means millions of customers faced hikes of up to 8.8% this year — adding as much as £50 to bills.
Firms argue that they need to be able to increase prices to keep up with rising costs.
But consumer experts argue that a fixed contract should live up to its name — and stay fixed.
What other mobile and broadband bills are rising?
It's not just Vodafone, Virgin Media and O2 hiking prices in April as a handful of providers are telling customers of increases.
Here's what we know so far...
BT
BT, which also owns EE and Plusnet, said that from March 2025, the price of mobile contracts will rise by £1.50 a month (SIM-only) or £4 (handset plans).
Broadband tariffs will go up by £3 a month and £2 for TV.
But, the provider has assured vulnerable customers on BT Home Essentials contracts that they will be exempt from any price rises.
The pounds and pence rise will apply to contracts taken out from April 10, 2024.
For those who took out a deal before this, a 6.4% rise will apply (3.9% and January's inflation rate, which was 2.5%).
Plusnet will also increase its broadband price by £3 per month from the end of March for contracts taken out after July 11, 2024.
For contracts started prior to this date, a 6.4% hike will apply.
Three
Three has said broadband increases will be capped at £2 and mobile prices between £1 and £1.50 depending on the data allowance.
The pounds and pence rises will apply for contracts taken out after September 8, 2024.
For those before rises are set at 6.4% (3.9% and January's inflation rate, which was 2.5%).
Tesco Mobile
Tesco Mobile said someone on a £14.99 a month a deal would see their monthly contract price increase by 90p in April.
While, customers on a £30 a month deal will see their basic monthly price increase by £1.80.
That's for contracts taken out after December 17, 2024. On those before this date, prices will rise 6.4% (3.9% and January's inflation rate, which was 2.5%).
Sky
Sky said this week broadband and TV bills will rise by 6.2% from April 1.
While the new Ofcom rules require providers to specify future price rises in pounds and pence upfront, it only applies if they are linked to inflation.
Sky's are not, so it can go ahead with a percentage increase.
For example, if you currently pay £39 per month for Sky TV, Netflix, and Full Fibre 150 broadband, your bill will increase by £2.42, bringing the total to £41.42 a month.
The same rises will apply to NOW Broadband, which is owned by Sky.
If you're on a broadband and mobile social tariff, you won't see an increase to your bills because Sky and Now has frozen its tariffs.
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Out of contract Sky Mobile customers will see bills rise by £1.50 a month.
Those in contract won't see a rise.
CUT YOUR TELECOM COSTS
SWITCHING contracts is one of the single best ways to save money on your mobile, broadband and TV bills.
But if you can't switch mid-contract without facing a penalty, you'd be best to hold off until it's up for renewal.
But don't just switch contracts because the price is cheaper than what you're currently paying.
Take a look at your minutes and texts, as well as your data usage, 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 have to spend extra on bundles or add-ons each month.
In the weeks before your contract is up, use comparison sites to familiarise yourself with what deals are available.
It's a known fact that new customers always get the best deals.
Sites like MoneySuperMarket and Uswitch all help you customise your search based on price, allowances and provider.
This should make it easier to decide whether to renew your contract or move to another provider.
However, if you don't want to switch and are happy with the service you're getting under your current provider - haggle for a better deal.
You can still make significant savings by renewing your contract rather than rolling on to the tariff you're given after your deal.
If you need to speak to a company on the phone, be sure to catch them at the right time.
Make some time to negotiate with your provider in the morning.
This way, you have a better chance of being the first customer through on the phone, and the rep won't have worked tirelessly through previous calls which may have affected their stress levels.
It pays to be polite when getting through to someone on the phone, as representatives are less inclined to help rude or aggressive customers.
Knowing what other offers are on the market can help you to make a case for yourself to your provider.
If your provider won't haggle, you can always threaten to leave.
Companies don't want to lose customers and may come up with a last-minute offer to keep you.
It's also worth investigating social tariffs. These deals have been created for people who are receiving certain benefits.
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