British broadband customers blast proposed mid-contract bill rises

October’s Consumer Price Index (CPI) figures for inflation have painted a bleak picture for UK homes and business alike. With mobile and broadband contracts likely to see bills rise mid-contract, research from Uswitch.com has found that four in five consumers regard mid-contract mobile and broadband price rises as fundamentally unfair.

The study of 2,000 UK adults in mid-October 2022 by the comparison and switching service revealed that more than a quarter (27%) of consumers regarded an increase of £5 to their monthly broadband or mobile bill as potentially causing them stress stress and two-fifths believed that mid-contract price rises should be stopped. The research also showed that 80% of Brits want providers to offer fixed-price deals for their broadband and mobile, with no mid-contract rises built in.

The background to the survey and to consumer anxiety is the fact that the majority of UK mobile and broadband providers link their annual price rises to inflation rates, measured by the CPI or Retail Price Index (RPI), with some including an additional price increase of 3-4% on top. With inflation at its highest level in decades, customers could be hit by price rises of around 14% at the end of March. Based on recent inflation rates, the survey calculated that 25 million mobile and 10 million broadband consumers are set for rises of up to 14% in April 2023.

Uswitch.com highlighted the decision by Three UK, the country’s fourth-largest mobile network, to introduce inflation-linked mid-contract rises based on December 2022’s CPI rate, plus 3.9% – the same rate as peers EE and Vodafone – for all new and upgrading customers from 1 November 2022. This compares with the 4.5% fixed rise applied in spring 2022.

“There seems to be no other industry that sees companies increasing their prices halfway through a fixed-term contract with no right to leave. It’s time Ofcom took action to help protect customers from these rises, so they know what they’re dealing with when signing a new contract,” said Richard Neudegg, director of regulation at Uswitch.com. “If providers cannot commit to a price for the duration of the contract, they should offer shorter contracts or the chance for consumers to leave penalty-free when prices jump.

“While annual price rises are not new, the recent unprecedented levels of inflation mean that these hikes are more painful than ever, especially during the cost-of-living crisis. If you are taking out a new broadband or mobile package, check for wording around annual mid-contract rises, which should be prominently shown at the point of signing up. If the annual rise is linked to inflation, it is impossible to predict exactly how much this will make bills rise by.”

The study stressed, however, that not all companies were planning mid-term price increases. Sky has frozen its pricing for new broadband customers signing up, while full-fibre provider Hyperoptic has never enforced mid-contract bill rises. Uswitch.com predicted the latter’s stance may gain them more subscribers, as a quarter of survey customers (25%) say they will take out their next broadband deal with a provider that does not apply annual price hikes.

The study also provoked reactions from other UK broadband providers and internet service providers (ISPs). Giganet chief executive officer Jarlath Finnegan noted that broadband was now an essential utility in the same way water and energy is, so the industry has a responsibility to respond and show its customers that it can, and will, support them through the challenges ahead by changing the way it does business.

“This has been a tough year, with people across the country having to cut costs and rein in spending to survive the cost-of-living crisis,” he said. “As customers grapple with inflation and rising living costs, we stand by our promise to abolish exit fees and mid-contract price rises. This not only offers peace of mind, but the flexibility needed to navigate this difficult period.”

Alexander Fitzgerald, CEO of independent provider Cuckoo, recently acquired by Giganet, added: “People need to be able to plan their finances – everywhere they look, prices are rising, [with]  10 million households on broadband deals facing hikes next spring. Providers must do the decent thing – scrap the exit fees and axe above-inflation increases.

“Most broadband customers are tied into long contracts. Many won’t have read the small print properly and won’t realise they face an annual increase tied to the Consumer Prices Index, with another 4% whacked on top. Broadband firms use opaque methods to calculate the fees, meaning customers aren’t sure of how much they could have to fork out.