UK telecoms regulator Ofcom has announced proposals to increase transparency around mid-contract price rises that affect phone, broadband and pay TV customers.
Ofcom has raised concerns about the widespread use of mid-contract price increases—often tied to inflation or percentage-based formulas—by major providers. The regulator believes these practices can leave consumers uncertain about future costs and reduce their confidence when comparing deals. As a result, Ofcom is proposing stronger consumer protections and is considering banning inflation-linked price rises in new contracts.
Confusing price rise terms
Ofcom warns that vague or unpredictable price-rise terms can weaken competition in the telecoms market. While average prices for broadband and mobile services in the UK have fallen over the past five years, the regulator says the growing use of inflation-linked increases creates uncertainty that prevents people from shopping around with confidence.
Ofcom’s analysis shows that, as of April 2023, a significant share of broadband and mobile customers were on contracts that allowed inflation-linked price rises. Despite the prevalence of these clauses, consumer awareness and understanding of how they work remain low.
Between January and October 2023, Ofcom recorded a marked rise in complaints about price increases, signalling growing consumer concern about unexpected bills and unclear contract terms.
Enhancing transparency
To tackle these issues, Ofcom is proposing a rule that would require providers to show prices in pounds and pence at the point of sale and to make clear when and how prices may change. The aim is to stop providers from using inflation-linked or percentage-based price-rise clauses in new contracts and to ensure customers know the exact cost they are agreeing to.
Ofcom is consulting the public on the proposed rule until 13 February 2024 and plans to publish a final decision in spring 2024. If adopted, the new rule would come into force four months after the final decision is issued.
At the same time, Ofcom is investigating whether some phone and broadband providers complied with existing rules between March 2021 and June 2022, particularly in how they communicated price rises to customers. Where providers are found to have breached the rules, Ofcom may take enforcement action.
“At a time when household finances are under serious strain, customers need prices to be crystal clear. But most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around,” said Dame Melanie Dawes, Chief Executive of Ofcom.
“Our tougher protections would ban this practice once and for all, giving customers the clarity and certainty they need to secure the best deal for their needs and budget.”
(Photo by Emil Kalibradov on Unsplash)
See also: In the fast lane: Analysing the UK’s leading broadband players
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