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Broadband price rises are set to be investigated by the Ofcom, the UK’s telecoms regulator.
An investigation into the industry-wide practice of introducing mid-contract price increases is to be carried out after all the big providers announced they will be raising rates for customers.
Ofcom says it could intervene to try and help customers struggling with the cost of living crisis and provide ‘greater clarity and certainty’ over what they’ll pay. Although a typical broadband contract may run for 18 or 24 months, there’s nothing to stop companies like Virgin Media O2, Sky or BT from raising prices mid-contract.
According to the watchdog’s research, a third of UK mobile and broadband customers are unaware this is the case.
Providers calculate their increases by taking inflation in either the consumer prices index (CPI) or retail prices index (RPI) and adding more on top – usually between 3.4 and 3.9 per cent. Considering RPI inflation stood at a 40-year high of 13.4 per cent in December, many may see an uncomfortable jump in their broadband bills.
‘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,’ said Cristina Luna-Esteban, the director of telecoms consumer protection at Ofcom.
‘Customers need certainty and clarity about what they will pay over the course of their contract.’
The average price of broadband in the UK is around £40 with contracts ranging from £22.99 to £55 a month. This means homes could pay between £3.31 and £7.92 extra for their internet. Over the course of a year that adds up to between £39.72 and £95.04 that customers will have to find in their budgets.
The price rises will of course vary depending on the provider and the terms of the contract. For example, Sky customers are expected to see an 8.1 per cent increase, Virgin Media O2 customers may expect 13.8 per cent and BT customers, 14.4 per cent.
Stephen van Rooyen, Chief Executive Officer, UK & Ireland and Group Chief Commercial Officer at Sky, said: ‘Sky welcomes the review from Ofcom into inflation-linked telecoms price rises. Sky does not pin customer price increases to inflation, as we don’t believe CPI or RPI – which use the price of items including bin liners, beer and burgers – should determine people’s broadband and mobile prices, or mean that they are locked into their minimum term contract.’
If you’re out of contract, then it may be a good time to switch providers and see if you can get a cheaper deal elsewhere.
It’s also worth haggling with the providers to see if you can get them to give you a cheaper rate. Quoting the prices offered for new customers is one way to try and put them on the back foot when negotiating for a contract.
The one ray of light is that not all broadband deals will increase in price. There are little ‘social tariff’ deals that are frozen in price.
These aren’t open to everyone but are restricted to those on benefits, lower incomes and the elderly. If you think you fall into one of these brackets it might be worth having a word with suppliers to see if you’re eligble.
‘Inflation-linked price rises can be unclear and unpredictable,’ Luna-Esteban said.
‘So we’re concerned that providers are making it difficult for customers to know what to expect.
‘At a time when household finances are already under significant strain, it is vital for customers to have sufficient certainty about the prices they will pay over the course of their contract. Even for those who do understand inflation and are aware of its current level, it is not possible for them to know what it will be in the future.’
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What is Ofcom and what does it cover?
Ofcom is the regulator for the communications services that we use and rely on each day.
The watchdog makes sure people get the best from their broadband, home phone and mobile services, as well as keeping an eye on TV and radio.
Ofcom deals with most content on television, radio and video-on-demand services, including the BBC. However, if your complaint is about something you saw or heard in a BBC programme, you may need to complain to the BBC first.
Its rules for television and radio programmes are set out in the Broadcasting Code.
The rules in the Broadcasting Code also apply to the BBC iPlayer.
This Broadcasting Code is the rule book that broadcasters have to follow and it covers a number of areas, including; protecting the under-18s, protecting audiences from harmful and/or offensive material and ensuring that news, in whatever form, is reported with due accuracy and presented with due impartiality.
Audiences can complain to Ofcom if they believe a breach of the Broadcasting Code has been made.
Every time Ofcom receives a complaint from a viewer or listener, they assess it to see if it needs further investigation.
If Ofcom decide to investigate, they will include the case in a list of new investigations, published in the Broadcast and On Demand Bulletin.
An investigation is a formal process which can take some time depending on the complexity of the issues involved.
Ofcom can also launch investigations in the absence of a complaint from a viewer or listener.
