Millions of households face more inflation-inducing increases in their broadband and phone bills next year, despite price survey
Millions of households in the middle of broadband and telephone contracts will face price increases of more than eight percent next year that will dampen inflation.
This is despite regulator Ofcom launching an investigation into whether such interim price increases are still justifiable.
Wealth & Personal Finance may reveal that Ofcom will not be able to block next year’s increases because its investigations – which started five months ago – will not be completed in time.
Broadband bills: Ofcom won’t be able to halt next year’s increases as probes won’t be completed in time
Ofcom says it is still ‘consulting’ on the matter. It means that customers are facing a second year of significant price increases.
In April, providers imposed interim contract increases of 13 to 14 percent. Some – applied by BT, EE, Plusnet, TalkTalk, Three, O2, Virgin Media and Vodafone – meant households paid £100 more than last year.
Wealth & Personal Finance had already urged Ofcom to ban interim price increases on grounds of fairness because customers signing up for a deal have no idea what they will pay at the end of their contract.
Ofcom said at the time it would look into the matter but was powerless to stop the price rises. Now we can reveal that Ofcom will not be able to stop the sharp price increases in April as well.
Most providers have written in the fine print of customers’ contracts that they will increase bills each April by the rate of inflation plus up to 3.9 percentage points. The figure used is based on the rate in December or January.
Inflation is expected to be around 4.7 percent next January, so providers could increase bills by this amount plus 3.9 percentage points — to a total of more than eight percent.
Ofcom CEO Dame Melanie Dawes told Wealth: ‘We won’t be able to change the rules in time for that [the April price rises]but this is why we are not just looking at whether or not we should take full regulatory measures [issue] all the time with the providers.’
She also said Ofcom is looking into whether the industry is complying with the current rules – and whether they need to be tightened up.