Broadband and phone customers may be spared the yearly inflation-linked price increases that mean many face £95 bill hikes in 2023 alone.
Regulator Ofcom said consumers do not understand how these price increases work and that it may have to take action over the issue.
However, Ofcom is not looking to make these deals cheaper – just to make sure that consumers understand how the pricing works.
Many communications firms put their prices up every year, but this comes as a surprise to many consumers
A quirk of how many broadband and phone deals have worked since 2021 is that prices can be raised mid-contract.
The big yearly increase happens in either March or April. Most providers base their price hikes on December inflation figures for the previous year then add on 3 to 4 per cent.
Because the Consumer Prices Index (CPI) level of inflation was 10.5 per cent in December 2022, broadband and phone customers are bracing for price rises of up to 14.4 per cent from late March and early April this year.
Ofcom today said it would review inflation-linked price hikes mid-contract for both phone and broadband customers.
The regulator said it wanted customers to have ‘sufficient certainty and clarity about what they can expect to pay’.
Because inflation is unpredictable, it means households have no idea how their bills will rise.
Around a third of broadband and phone customers have no idea their bills can rise in this way, according to Ofcom’s research.
Ofcom is looking into the issue now and will make a decision on it later in the year.
Cristina Luna-Esteban, Ofcom director of telecoms consumer protection, said: ‘We’re taking a thorough look at these types of contract terms, to understand fully the extent to which customers truly know what they’re signing up to, and whether tougher protections are needed.’
However, in the meantime customers may not have to pay mid-contract price hikes.
Not all internet and phone deals are going up
Not all broadband and phone firms will increase prices this year, and not all tariffs will go up significantly. Firms including O2 are still deciding their tariffs for 2023/24, while many other providers are not increasing prices for certain tariffs.
Also, many little-known ‘social tariff’ deals will be frozen in price. These deals are not open to all, and are mostly restricted to those receiving benefits, on lower incomes and the elderly.
A social tariff is a cheap broadband deal only available to struggling households. These cheap deals exist because since 2020 industry regulator Ofcom has demanded that providers give low-cost options to the most hard-up customers.
It is well worth checking if you do qualify, as Ofcom says only 3 per cent of eligible households have a cheaper social tariff.
Another perk of social tariffs is there are no exit fees for leaving them before your term ends.
