Mid-Contract price rises

[Ian06]

I really hate this practice of offering 18 or 24 month contracts with a built in Inflation + 4% price rise each April. My broadband and Mobile contracts went up by about 15% each back in April, I strongly believe this was unreasonable and should have allowed me to leave my contract if I believed this was uncompetitive (and prices offered to new customers are almost always cheaper.)

"Which?" have started a campaign (primarily focussed on mobile) that should also relate the broadband, if you want to support their campaign you can sign their petition here:  Which Campaign

[Christopher_G]

Hi @Ian06 

As usage across our networks continues to increase, and with our customers relying on us for connectivity more than ever before, it’s crucial that we continue to invest in our networks, services and the latest technology.

Chris

[Chris_B]

@Ian06  As you are aware at the time of taking out the contract and you agreed to the T&Cs of that contract that there is a CPI+3.9% increase each year. You agreed to that so unfortunately because you agreed to the T&Cs you are not able to get out of the contract unless you pay it off.  You knew it was coming what you don’t know at the time is what the CPI rate will be in December.    No one knows what the CPI rate will be in December.     Yearly price increases are not a way to get out of a contract that you agreed to in the first place.    Nothing stopping you from getting a cheaper tariff when you can upgrade.   It’s the main reason I checked the Decembers CPI rate when it’s published in January so I know what to expect and make a decision on my contract.     I got a deal on a sim only and took around £50 of my phone bill.  It pays to not always have a new device each year or every 2 years or stick with a sim only and purchase your device elsewhere. 

What your not reading in the link provided is that all these companies have bills to pay also and like every one else have to pay for electricity/gas/etc and also the parts required to keep the infrastructure going, and these parts will have also increased in price because those companies making them will have seen their production costs go up because you know electricity/gas have gone up.  It’s a vicious circle, that unfortunately the consumer pays for.      If this does happen I’m sure you’ll see fixed contracts prices go up to cover any potential costs over 2 years.   It’s win each year on price increases but it could be a loss over the term of the contract. 

[Ian06]

Thanks for responding and putting in a balanced view.

I don't understand why most contracts now lock a customer in for 2 years if the Telcos can't predict and manage costs for that long. The customer is expected to commit to 2 years, or pay a big penalty if they leave early, but the Telcos don't provide the reciprocal commitment of fixed price.

I understood what I signed up for but couldn't know what the actual increases were going to be and there didn't seem to be any options for shorter contracts. Telcos should have to offer 1 year fixed price contracts or multi-year contracts with annual price increases on the anniversary of contract start.

OFCOM made a mistake by allowing mid-contract raises and I don't really understand why it should be Inflation plus (which is around 1.5 times inflation at the moment.)  I understand everyone's costs have gone up (including the Telcos, who are bigger energy users) but don't lock customers in to a long term contract if you can't manage costs or at least give people the option of shorter fixed price contracts.

[Chris_B]

@Ian06   A short term contract say 12 months will have to include the cost of the handset if that’s applicable.   So a £700-£1000 phone will also have to be paid within that timeframe.   So basically let’s say £70 tariff will almost double in price if it was a 12 month contract.    You can have a tariff where you pay for the device over 3 years and the tariff is billed over 2 years.   Any price increase is only applicable to the tariff and not the device.  And you can pay off the device quicker if you choose too.    It’s called flex pay.  

[Ian06]

That may be true for a mobile contract that includes a phone,  but isn't really the same for a Broadband contract.  Yes there is a  router that needs to be costed in I guess (although I prefer to use my own.)

I can see how a 12 month contract that includes a new handset would be problematic from a cost perspective, however it's not relevant to SIM only contracts, and only serves to highlight the deception of combining Hire Purchase of a handset combined with the network access costs.  The cost of providing the handset is fixed at the start of a contract and there is only an argument (inflation) for increasing the network access charge.

In my case I am on a SIM only contract and a Broadband contract - I see no real justification for a 2 year contract and increasing it each April by 1.5 to 2 times the rate of inflation.

[Chris_B]

@Ian06  if you’re going to Sim only then 12 months you pay slightly more than a 24 month contract because obviously EE wants to tie you into a 24 month contract and you get slightly better offers on 24 months.   But going for a 12 month contract you can upgrade at just the right time and not be affected by any price increases.     

 As for broadband using your own router is totally up to you, but they should have a variety of broadband packages where you can choose to have a router or not choose to have a router in that case, you’ll have a slightly cheaper tariff as you’re supplying your own router much like a sim only contract.     The waste part about having a router supplied is that when you upgrade, you don’t get a new router(depending on the connection you go with ) and you end up paying more or less the same as what you’re paying when you’ve got the router so that only concludes that the router is supplied free of charge.      

if there is a zero rate on inflation ( haha ). Than it’s only a 3.9% increase.    It just shouldn’t be a CPI & 3.9% increase and something like a 4-6% increase per year so you know what you’ll be paying each year until you upgrade and you start all over again.    

What ever is going to happen someone will complain about it that I guarantee.  You can not please all the people all the time but you can please most of the people most of the time. 

[chrism20]

I get the part of it being in the contract when you signed etc and can deal with that, hopefully this years mega increase isn’t repeated next year.  

This policy however does grind my gears though.  For example I got an Apple Watch in January £28 a month. Yes I knew it would go up in April, I had factored that into my thinking when I purchased it.

However following the price hike guess what?  Same watch and the same package for £28 for a new purchase.  

Thats the part that really annoys me.  They bang on about investing in the network etc etc and that’s why it increases but continue to sell it at the lower price after increasing it whilst the signal where I work has fell off the edge of a cliff for the last four weeks.   

No wonder other operators are advertising like hell about no in contract increases during the contract term and they wonder why I haggle like hell and drive the price down every time it comes to an upgrade.   I upgraded my phone a few weeks ago and I was pretty blunt with the guy and told him the most I was willing to pay but had also factored in next years increase which is likely to be 10%

[Chris_B]

@chrism20   And then the person purchasing a new watch will get an in contract price increase.    If you upgraded you start again at a lower price probably or you go sim only for your current watch.  

Only around 2 networks are stating no in contract price increases but those networks did state back in March they will not rule out a price increase but at present have no plans to increase prices.     So what actually does this mean.   Nothing at present but you could/might get one and nothing about how much of an increase it’ll be.   And these are MVNO networks.   There is only 4 cellular networks in the UK that actually have their own cellular network the other networks use one of the 4 to give their customers a signal.  So these MVNO network have no network to operate and you could start a contract say using the EE network and before that contract is up you could be using o2 as that MVNO network has got a new deal with o2 and you might no longer have a signal where you once did because of that network change and theirs nothing you can do to get out of that contract without paying it off.     

[chrism20]

Oh I understand what you're saying, I just don't agree with the way they apply it. 

If the price is going up for current customers "To develop the network" I am of the opinion the headline price goes up at the same time.  

Of course we all know the headline price doesn't go up because they need to compete with all the other companies who haven't hiked their headline price.  

Like I said I knew what was going to happen with regards to my tariff when I signed up to it but I don't see why new customers should have their Network Development Levy waived for the first year.  If the network is in need of that much development everybody should be paying for it.

And from the current shambles that is unravelling with the iPhone 15 launch and the lack of communication to customers maybe some of that development money could be used in developing their communication skills.