Pull plug on phone and broadband giants’ price hike rackets… NOW!

Wealth & Personal Finance is calling today for an end to the mid-contract broadband and telephone price racket that will cost households millions of pounds.

Customers of BT, EE, Plusnet, TalkTalk, Three, O2, Virgin Media and Vodafone will see their broadband and telephone bills increase in the coming weeks.

Most are dealing with inflationary increases of 13 or 14 percent. Some will pay more than £100 a year more. The price increases even apply to customers in the middle of their contract. In most cases, people will be forced to pay – or else be fined if they choose to cancel.

Raising prices midway through the contract is extremely unfair. It means that customers who sign up for a phone or broadband deal have no idea what they’ll pay at the end of the contract.

Millions of households are budgeting every pound as they battle the rising cost of living. Sticking to a contract should help by providing some certainty about how much they will have to pay. This applies to most consumer contracts, including fixed utility bills, mortgages, and insurance premiums.

And yet broadband and telephone providers are shamefully able to write into their customers’ contracts that their bill will increase every year, by an amount that the customer does not know when they sign up.

The regulator, Ofcom, is looking into the matter but has only promised to publish initial findings later in the year. It admitted to The Mail on Sunday that it won’t publish them until this year’s price hikes come into effect. That is why the MoS calls today for:

• A ban on interim price increases;
• Customers may terminate their contract without penalty if they are not satisfied with interim increases in their bills;
• Ofcom to urgently report its findings before it is too late.

Wealth & Personal Finance has been approached by dozens of readers who are concerned about paying their increased bills and are outraged that they are being hit by the interim contract increases.

Typical is Cliff Hamilton, 70, from Portsmouth, who has been told his Virgin Media phone, TV and broadband package will increase by nearly £30 in April. The ex-Forces retiree has been with the provider and its predecessor, NTL, for 33 years and has never missed a payment.

“It’s daunting to switch providers, so I’ve come to the difficult conclusion that we need to cut back on our Virgin Media services and accept a cheaper but slower internet connection,” he says.

Gordon Smith, 56, from Luton, has been told his EE bills will rise by more than 13 per cent. He believes the increases faced by households are unacceptable given the length of contracts that people are pushed into agreeing to. ‘First we were asked to secure 12 month contracts, then it increased to 18 months, then 24 – recently I was asked if I wanted a 36 month contract. But the providers tie us down and we have no idea what to expect.’

Gordon thinks it’s completely unfair that customer bills are going up to pay for providers’ investments, but the proceeds are still being paid to shareholders. “I understand that profits paid to shareholders go to us through our pension funds,” he adds. “But I’d rather have the money upfront than wait until I get it in my retirement.” John Dick, 75, a Sky customer from Romsey in Hampshire, suggests the problem could be solved by restricting contract terms.

‘I think a contract should be binding and should not increase in price in the meantime,’ he says. “It’s outrageous that they tie you up for 18 months or more and charge you a fortune to get out. There must be a maximum term of 12 months, with a notice period of 30 days.’

Most major providers raise prices by the rate of inflation each year, plus an additional 3.7 or 3.9 percent. With inflation in the double digits, increases will reach record highs this year. Alan Harmer, 78, from Letchworth in Hertfordshire, believes action on this issue is alarmingly late. “A few years ago, when inflation was only 1 or 2 percent, phone and broadband providers were allowed to raise their prices by 3.9 percent plus inflation to encourage investment in infrastructure,” he says. “This problem should have been investigated back then, before inflation picked up. The big suppliers are allowed to take profit and let the public pay for the risk.’ Alan is with BT and will see his bills increase by double digits.

Alan Bass, 72, from Broxbourne in Hertfordshire, says he has no problem with telecom companies making a profit. But he was shocked to receive a letter from Virgin Media informing him that it is amending its terms and conditions so that it can increase its bills by inflation plus 3.9 per cent every April.

“What strikes me is that if you have a two-year contract, your bills are increased twice. They build in an inflation increase on top of an inflation increase,” he says. ‘Providers ask you to sign for two years, but how do you sign a contract if you don’t know if you can afford it?’

Alan has been a Virgin Media customer since the 1990s and will pay more than £87 for his package if his bills rise by 13.8 per cent.

For some readers, these latest price hikes are the last straw.

Maria Astley from Birmingham is shocked that Virgin Media plans to increase her mother’s bills by 20 per cent. ‘She is a 91-year-old lady with dementia and cannot do without a telephone,’ says Maria.

“It’s her lifeline and also our way of contacting her throughout the day to ensure her well-being when we can’t go around checking on her.” How can this be justified? Ofcom needs to step in to stop this – it’s getting ridiculous.’

Most providers that link bill increases to inflation use the consumer price index (CPI) measurement. This is considered one of the most accurate measures of inflation and is preferred by the Office for National Statistics. But O2 and Virgin Mobile use the outdated Retail Price Index (RPI), which is typically higher and now frowned upon by statisticians. RPI inflation plays a role in housing costs, while CPI does not.

Brian Barbour, 68, a professional pension manager from Edinburgh, says it’s “appalling” that some companies are basing their gains on RPI inflation. ‘Since when do telecom companies suffer from accommodation costs?’ he asks.

Brian adds that many are putting a floor on price increases so that even if inflation turns negative, bills will still go up. “It’s heads they win, tails they win,” he says. ‘Companies can cover part of their costs, so that they know in advance how they can protect themselves. Customers should also expect predictability in their spending wherever possible.’

AND THIS IS HOW THEY DEFEND THE PRICE RISES

A BT consumer spokesperson, speaking on behalf of BT, EE and Plusnet, said: ‘We understand that price increases are never desirable or welcome, but recognize that they are necessary given the rising costs our business faces.

“This year’s increase, of just over £1 per week for the average customer receiving the increase, reflects incredible value given the cost increases we are facing and the significant investment we are making in our network. We also protect vulnerable customers suffering from financial hardship or digital exclusion through our market-leading social rates.”

TalkTalk says that, unlike Virgin and BT, it does not own the lines it uses for its network and has no control over the wholesale price it pays, which is rising due to CPI inflation.

Virgin Mobile and O2 say price increases of 17.3 percent will apply to the airtime portion of customers’ bills, not device costs. A spokesman for Virgin Media said: ‘We know that price increases are never welcome, especially now, but like many companies we are experiencing significantly higher costs as we invest to keep up with growing demand as broadband usage rose by 2000 last year. rose more than 10 percent. years and speeds increased by 40 percent.”

A Sky spokesman said: “We have tried to minimize the impact on customers with an average price increase for all our broadband and TV customers of 8.1 per cent, which is again below inflation levels – the average increase of competitors in the past two years. year is almost double Sky’s in the same period.’

A spokesperson for Three UK said: ‘We understand that the cost of living crisis is currently impacting our customers. However, with energy and supplier prices rising substantially and network roll-out costs rising significantly across the board, we have made the difficult decision to pass on some of this increase to our customers’ bills.”

Unlike other major providers, Tesco Mobile does not increase customer bills midway through the contract. A spokesman said: ‘Our ambition is to offer high-quality products and services. Freezing our prices for the duration of their contract is one of the ways we’ve achieved this, as it helps customers know exactly where they stand with their bills.”