Which? – Telecoms firms must ditch ‘outrageous’ price rises that could trap consumers with huge exit fees

Telecoms firms must ditch ‘outrageous’ price rises that could trap consumers between £60 hikes and £500 exit fees, Which? urges

Broadband and mobile users face being trapped this Spring between price rises of potentially more than £60, or contract exit fees which may exceed £500, Which? research has found.

The consumer champion is calling on telecoms firms to scrap these grossly unfair plans for April 2024 inflation-linked hikes that regulator Ofcom clearly determined cause ‘substantial harm’ to consumers.

Most of the big broadband and mobile providers are expected to go ahead with unfair and unpredictable price hikes using Consumer Prices Index (CPI) plus an arbitrary figure in April this year.

Based on responses from Which?’s latest broadband survey and analysis of mobile market data, the consumer champion has calculated how much an in-contract BT, EE, Plusnet, Shell Energy Broadband, TalkTalk, Three or Vodafone customer could see their payments rise by.

Which? found that, across the board, the CPI-linked hikes faced by affected consumers work out as customers essentially paying close to a whole extra month on top of their existing contract, yet they do not benefit from any additional services for this extra cost.

The inflation-linked price hikes come just 12 months after many of these firms imposed price increases of more than 14% on their customers.

BT, EE and Plusnet have already confirmed they will be going ahead with price hikes of 7.9% for customers this April (the latest CPI figure of 4% plus an arbitrary 3.9%). BT has said it will implement Ofcom’s proposals in the summer but Which? believes it is cynical to try to claim too much credit for a change they would likely have been forced to make later this year by the regulator. BT has the power to make this change now rather than waiting until the summer.

Out of the providers using CPI to calculate increases, the impact of BT’s hike will be the biggest for broadband – according to Which? analysis it is predicted to be £35.92 annually for an average BT customer.

The average BT customer will already be paying £37.89 a month on average. If they wanted to switch to another provider they would face an exit fee of £218.64 assuming they had 12 months remaining on their contract.

Meanwhile, the average Vodafone Sim-only mobile customer faces the biggest annual price hike of the major mobile providers. Its expected 7.9% (CPI+3.9%) increase means the average customer paying £28.89 a month would face a £27.36 annual price hike from April 2024. A Vodafone customer wanting to avoid this scenario would face an eye-watering £339.75 fee to exit the contract early.

A customer who faced both of these respective price hikes would be looking at a combined £63.28 price hike or the alternative of a total of £558.39 in exit fees.

Which?’s research found that the average EE broadband customer pays £34.05 a month on average, but faces price hikes this April of £32.28 or an exit fee of £132.38.

Vodafone broadband customers pay £31.16 a month on average, however they face annual price hikes of £29.54 this April versus exit fees of £121.42.

TalkTalk has confirmed customers on its variable plans will face a slightly lower April percentage hike of 7.7% (CPI+3.7%). However, according to Which?’s research, it is predicted that this would still result in a £29.53 yearly hike, while it would cost £122.40 to leave the contract. These figures are disputed by TalkTalk.

EE mobile customers face a £24.84 hike or a £289.64 exit fee, while Three mobile customers face a £19.20 hike or a £235.24 exit fee.

Plusnet broadband customers face an annual hike of £28.31 or an exit fee of £141.81, while Shell Energy broadband has confirmed it will be going ahead with a 6% (CPI+2%) annual price hike for customers that could result in a £18.46 increase or an exit fee of £222.

O2 and Virgin Media use RPI as the measure for their price hikes. RPI is announced in February and is often even higher than the CPI+3.9% figure.

Which? believes it is unconscionable that broadband and mobile providers are planning to go ahead with inflation-linked price rises this April 2024, which will impact millions of people, after the regulator declared this practice causes substantial consumer harm and proposed a ban.

Which? is concerned that consumers taking out a 24-month broadband or mobile contract between now and Ofcom making its decision on new rules could still face unfair and unpredictable price hikes. In some cases this could even result in unpredictable price hikes in April 2026 as they will have signed up to those terms and conditions.

The consumer champion is calling for all providers to scrap this year’s above inflation hikes and implement Ofcom’s proposals as soon as possible so new customers are not trapped in these unfair contracts.

Rocio Concha, Which? Director of Policy and Advocacy, said:

“It’s outrageous that telecoms firms could yet again trap their customers between inflation-busting price hikes and punitive exit fees this April, despite Ofcom declaring this practice causes substantial consumer harm.

“Telecoms providers must do the right thing by halting unfair price hikes immediately, rather than piling more misery on their customers.”