Phone misery: your bill could rocket 18%

Matthew Upton from the charity Citizens Advice said: “These increases couldn’t be coming at a worse time. Every day our advisers are hearing from people struggling with the cost of living crisis. If firms push ahead with price increases, customers face a £2.5 billion bill across mobile and broadband this year. Companies should be finding every way possible to help people right now.”

Rising prices coupled with the cost of living crisis are putting a strain on household finances. The telecoms regulator Ofcom said that its research suggested that 32 per cent of households were struggling with phone or broadband bills — more than twice as many as in April 2021.

Consumer groups want phone and broadband price rises to be capped, or at least fixed, rather than based on future inflation. Some say it is unfair that prices can be put up mid-contract when customers cannot switch firms.

“There is no logical reason why telecoms should be a special case in which monthly prices can rise, to a number you cannot predict, in the middle of a contract, with no right to leave when it happens,” said Richard Neudegg, director of regulation at the comparison site Uswitch.

The Office for Budget Responsibility expects CPI inflation to average 10.2 per cent over the first three months of this year. This would mean that BT, EE and Vodafone customers will pay 14.1 per cent more (CPI plus 3.9 percentage points). TalkTalk customers will pay CPI plus 3.7 percentage points more.

O2 uses the RPI measure of inflation which is typically higher — it was 14 per cent in November compared with CPI, which was 10.7 per cent. Last year some broadband and phone bills rose 11.7 per cent. EE customers paid 9.4 per cent more, or £3.50 extra a month on average, the company said.

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A £20 a month O2 contract at the start of last year would have gone up to £22.34 at the end of March, and could cost £26.34 from April.

These price rises are written in to most phone and broadband contracts. A typical contract lasts two to three years, so you can expect at least two price increases over that time.

Ofcom does not have the power to stop companies including these inflation-linked rises in their contracts, but does say that they should be clearly explained. You have the right to exit a contract penalty-free within 30 days of a price increase if the company has not made these rises clear.

Last month Ofcom launched an investigation because it was concerned that those who took out contracts between March 2021 and June last year “may not have been provided with sufficiently clear information about in-contract price rises.”

Some companies, including Giffgaff, Hyperoptic, Now TV, Sky, Tesco Mobile and Virgin Media do not have inflation-linked price increases. If they do increase your bill, you can exit the contract. Neudegg said: “We advise anyone taking out a new deal to thoroughly check the wording around annual price rises to make sure you know what you could expect.”

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If you are out of contract, you can switch at any time. Neudegg said that switching to a Sim-only deal could save you £321 a year.

If you’re struggling, ask your company if you are eligible for a social tariff, from about £12 a month. You normally need to be on benefits to qualify. About 136,000 people are on these tariffs, according to Ofcom, but that is only 3 per cent of those eligible.

TalkTalk and Vodafone said it was too soon to say whether they would go ahead with price rises, given the cost of living crisis.

BT, which owns EE, said prices would rise in line with this month’s CPI figure. It said: “Although telecoms bills remain a small fraction of total average household spend, we know that everything adds up. We are balancing our own rising costs and making vital digital infrastructure investments for the UK.”

O2 said it was facing inflationary-driven costs of its own, and that there was support available for customers on its website.

‘I’m going to switch as soon as I can’

O2 customer Caitlin Youd faces one last price rise this year before she is out of contract and free to switch her phone company. Youd, 25, who lives in east London, took out a three-year deal in August 2020 for a new Huawei P30 Pro.

The amount she pays for the phone itself has stayed at £15.46 a month, but the charges for data, calls and texts have gone from £24 to £26.22 a month.

Her bill will rise again from April in line with February’s retail prices index (RPI) measure of inflation. RPI was 14 per cent for November, which would push her bill up to £29.89.

O2 wrote in February last year to say that her bill was going up, but she could not find out how much it would cost her in the email, online or in the app. She found out only by phoning customer services.

Youd plans to switch to a deal that is not inflation-linked: “Being stuck with a bill that goes up 10 per cent plus every year is not something I’d want.”