Millions of phone customers are trapped in Catch-22 of having to pay prices soaring by up to 25 per cent or meet eye-watering exit fees to leave their broadband provider
- Most mobile and broadband firms plan on average price rises of 13-14 per cent
- Customers wanting to escape increases will be hit with a contract exit penalty
Millions of mobile phone and broadband customers are trapped in a catch-22 of either paying punishing price rises of up to 25 per cent or eye-watering exit fees, it has been revealed.
The warning comes from Which? and follows industry announcements of extraordinary price rises in April and May that will turn the screw on customers.
Most mobile and broadband firms are planning average price rises of 13-14 per cent, however some customers face much higher increases which could add over £200 to annual bills.
Customers of O2 are facing a rise on mobile phone usage of 17.3 per cent while some broadband and TV packages at its sister company Virgin Media are set to go up by as much as 25 per cent.
The tech companies are able to get away with it because they have smallprint clauses in their contracts which allow them to increase prices by inflation plus an extra 3.9 per cent.
Millions of mobile phone and broadband customers are trapped in a catch-22 of either paying punishing price rises of up to 25 per cent or eye-watering exit fees
In most cases, customers who want to escape these increases are hit with contract exit penalty charges, which can be more than £400.
The telcoms watchdog, Ofcom, asked mobile and broadband companies to rein in price rises due to hit this Spring because of the cost of living crisis however the major players refused to do so.
Which? Director of Policy and Advocacy, Rocio Concha, said: ‘It’s hugely concerning that many customers could find themselves trapped in a catch-22 situation where they either have to accept exorbitant – and difficult to justify – mid-contract price hikes this Spring or pay costly exit fees to leave their contract early and find a better deal.
‘With many households struggling to make ends meet, it is completely unfair that people are trapped in this situation.
‘Which? is calling on providers to act quickly and reconsider any price rises. Firms should cancel 2023 hikes for financially vulnerable consumers and allow all customers to leave without penalty if they face mid-contract price rises.’
EE, Vodafone and Three are raising prices according to the CPI measure of inflation plus 3.9 per cent. This equates to an average increase of around 14 per cent, although the figure will vary depending on the customer’s package.
Which? said the average EE customer would see an annual increase of £66.36 while the typical Three customer would see a hike of £56.40 to their bundled contract.
The consumer champion said an EE customer would face eye-watering exit fees of £424.67 to leave their contract a year early and a Three customer would need to fork out an exit fee of £379.46.
Customers of O2 are facing a rise on mobile phone usage of 17.3 per cent amid industry announcements of extraordinary price rises in April and May
Virgin Media, sister company of O2, are set to increases prices on broadband and TV packages by as much as 25 per cent
O2 and Virgin Media use the high RPI measure of inflation plus 3.9 per cent as the basis for their price rises, which means the average increase on mobile phone contracts will be 17.3 per cent.
One Virgin Media broadband customer complained the company planned to increase his monthly package – covering landline, internet access and basic tv – from £35 a month to £44 – an increase of 25 per cent.
Another broadband customer currently paying £100.50 per month for internet, TV and phone, was advised this is due to go up by £21.50 a month from May, which is a rise of 21.4 per cent or £258 a year.
Mobile and broadband giants say they are helping customers on low incomes by capping price rises on basic services.
EE said: ‘We understand that price rises are never wanted nor welcomed but recognise them as a necessary thing to do given the rising costs our business faces.
‘EE has been upfront about price changes when customers agreed to their contract and before a price rise, so customers always know where they stand.
‘Vulnerable customers suffering from financial hardship or digital exclusion are protected through our market leading social tariffs.’
Which? said the average EE customer would see an annual increase of £66.36 while the typical Three customer would see a hike of £56.40 to their bundled contract
Virgin Media O2 said: ‘We know that price increases are never welcome but, unlike other providers, we freeze the cost of device repayments and are only changing our airtime prices.
‘These changes occur as our own business costs rise and we invest heavily in our mobile network to keep pace with ever increasing usage, rollout new technologies like 5G and deliver valuable services that matter to our customers – whether that’s flexible plans, inclusive EU roaming or access to exclusive events and savings through Priority.’
O2 said most of its contracts are 12 months or less, so it is unlikely the majority of its customers will face a high 12-month exit fee. Vodafone declined to comment.
Three UK said: ‘We understand that the cost-of-living crisis is having an impact on our customers at present. However, with energy and supplier prices increasing substantially and network roll out costs rising significantly across the board we have taken the difficult decision to pass some of this increase onto our customers’ bills.’
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