Ofcom cracks down on unpredictable telecom price hikes

Ofcom, the UK’s communications regulator, will require telecoms providers to clearly state any price increases in pounds and pence upfront, giving customers more certainty about their monthly outgoings.

The new regulations are set to take effect from 17 January 2025 and come in response to the growing trend of major UK phone, broadband, and pay TV companies including inflation-linked price rises in their contracts. Ofcom found that this practice left customers without sufficient clarity about future prices and unfairly burdened them with financial uncertainty.

Cristina Luna-Esteban, Ofcom Telecoms Policy Director, said: “With household budgets squeezed, people need to have certainty about their monthly outgoings. But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.”

Under the new rules, any price rise written into a customer’s contract from January 2025 must be prominently and transparently displayed at the point of sale. Providers will also need to clearly communicate when these changes will occur.

For example, instead of using complex formulas like “CPI+3.9%,” providers will need to state specific amounts. A contract might now read: “Monthly subscription price: £30.00 until 31 March 2025,” followed by “Increasing to: £31.50 on 1 April 2025” and “£33.00 on 1 April 2026.”

The move comes after Ofcom’s research revealed a significant lack of awareness and understanding among consumers regarding inflation-linked price rises. More than half of broadband customers (55%) and pay monthly mobile customers (58%) were found to be unaware of what inflation rates like CPI and RPI measure.

Furthermore, among customers with providers using inflation-linked price rises, only 16% of broadband customers and 12% of mobile customers were both aware of the price rise and able to identify that it was inflation-linked with an additional percentage.

“We’re stepping in on behalf of phone, broadband, and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily, and take advantage of the competitive market we have in the UK,” explained Luna-Esteban.

The new regulations build upon Ofcom’s existing rules, which were strengthened in 2022 to ensure providers make any specified price rises clear before customers sign up. If providers don’t specify price rises in advance, they must give customers one month’s notice and the right to exit penalty-free when increasing prices mid-contract.

While the deadline for implementing these changes is set for January 2025, Ofcom encourages providers to adopt the new practices sooner if possible. In fact, industry giants BT and Vodafone have already adjusted their pricing practices in response to Ofcom’s consultation.

As the new rules take effect, consumers can look forward to greater transparency and predictability in their telecom contracts, making it easier to budget and compare deals.

(Photo by Adrian Swancar)

See also: Bridging the digital divide: How a coalition is tackling smartphone affordability

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Tags: broadband, contract, law, legal, mid-contract, mobile, ofcom, price rises, regulation