‘Outrageous’ mid-contract price hikes could leave broadband customers up to £150 out of pocket,  Which? warns

Broadband customers could be charged £150 more than they expected over the course of their contract due to two years of eye-watering price hikes, Which? warns, as the consumer champion campaigns for an end to unpredictable mid-contract price rises in the telecoms industry. 

Which? is sounding the alarm on unpredictable mid-contract price hikes as it launches a new campaign calling on providers to do the right thing and stop these increases - and for Ofcom to ban the practice altogether.

Many of the biggest broadband firms – such as BT, EE, Plusnet, Shell Energy, TalkTalk, Virgin Media and Vodafone – raise prices every April in line with the Consumer Price Index (CPI) or the Retail Price Index (RPI) plus an unexplained additional 3, 3.7 or 3.9 per cent. If customers want to avoid these hikes, they can be charged punitive exit fees to leave their contract early.

Based on figures from Which?’s latest broadband survey and analysis of Bank of England inflation forecasts, the consumer champion has predicted how much BT, EE, Plusnet, Shell Energy, TalkTalk, Virgin Media and Vodafone customers could see their bills increase in 2024 and over the course of their contract, compared to the amount quoted when they originally signed. 

On average, BT, EE, Plusnet, Shell Energy, TalkTalk and Vodafone customers could see increases of more than 8 per cent in 2024 while Virgin Media customers could see rises of over 10 per cent. 

Based on average contract amounts from Which?’s 2023 broadband survey, Virgin Media, BT and EE customers could see the biggest annual increases of £50.52, £43.68 and £43.68 respectively in the year from April 2024. Shell Energy Broadband customers could see the smallest annual price hike of £27.16 on average.

These hikes would come on top of the eye-watering price hikes of more than 14 per cent many consumers faced in 2023.

Which? also calculated how much extra these two rounds of price hikes could cost a customer for each provider who took out a deal in January 2023 over the course of their 18 or 24 month contract.TalkTalk currently mostly advertises 18 month contracts on their website while BT, EE, Plusnet and Vodafone all primarily advertise 24 month contracts.

Based on average amounts from Which?’s 2023 broadband survey, BT and EE customers who took out a contract in January 2023 could see some of the highest average price hikes of £147.43 and £147.31  across the course of their contract. Vodafone and Plusnet customers could see rises of £122.38 and £117.87 respectively. 

TalkTalk customers could see a smaller hike of £76.09 on average over the course of shorter 18 month contracts.

Shell Energy Broadband did not apply its 2023 inflation-linked price hikes of 12.5 per cent to customers who joined from January to March 2023. However, if a Shell Energy customer joined before January 2023 then, based on average amounts from Which?’s 2023 broadband survey, they would pay an extra £45.27 a year from Spring 2023 to Spring 2024.

Virgin Media did not use inflation-linked price hikes in 2023 but some customers’ prices did increase by an average of 13.8 per cent due to ad hoc price rises. 

According to Virgin Media, customers who signed up after November 2022 would not have faced the ad hoc price rise in Spring 2023. Those on a fixed-price promotional deal - like those offered to new customers - would also not have seen the price hikes take effect until after their deal promotional ended. However, terms and conditions and communications with customers did not always appear to explain this situation clearly.

Based on Which?’s 2023 broadband survey, if a Virgin Media customer paying the average contract amount was subject to the ad hoc price hikes of 13.8 per cent, they would pay an extra £67.07 a year from Spring 2023 to Spring 2024. 

Which? believes it is unfair - and in some cases, potentially unlawful - for consumers to be signed up to deals which do not give them any certainty about how much they can expect to pay over the course of their contract and then face punitive exit fees if they want to leave early. 

Separate Which? research found that around eight in 10 (78%) consumers believe that mid-contract price hikes are always unfair and that people overwhelmingly value pricing certainty for broadband contracts. 

This is why the consumer champion is launching its ‘The Right to Connect’ campaign calling for clearer and fairer pricing for telecoms customers and an end to unpredictable mid-contract price hikes. 

Ofcom is currently reviewing inflation-linked, mid-contract price rises amid concerns that they do not give consumers sufficient certainty and clarity about what they can expect to pay. It is due to publish its consultation on this issue in December. 

Today, Which? is launching its ‘The Right to Connect’ campaign calling on all providers to do the right thing and stop this practice ahead of Ofcom’s final decision, to ensure that customers are not impacted by similar unpredictable price rises next April.

In the longer-term, the consumer champion believes the regulator should ban these unpredictable mid-contract price hikes as they unfairly penalise consumers, make it hard for people to predict how much their broadband contract will cost and dampen price competition in the telecoms market.

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

“From working and school to online banking and social media, a good broadband and mobile connection is essential to everyday modern life. 

“That’s why it’s outrageous that unpredictable mid-contract price hikes have been allowed to continue in the telecoms industry for so long - especially when so many have been struggling to make ends meet during the cost of living crisis. Consumers must have certainty about the total cost of their contract.

“Which? is calling on all providers to do the right thing and cancel 2024’s above inflation price hikes. Ofcom should also use their review to finally ban these unpredictable mid-contract price hikes that harm consumers and undermine competition. Consumers need to know exactly how much their contract will cost when they sign up.”

ENDS 

Notes to editors

Which? ‘The Right to Connect’ campaign 

Access to the internet has become a basic necessity to life in the 21st century - for everything from work and school to socialising, shopping, banking, and accessing essential government services. 

Which?’s ‘The Right to Connect’ campaign is calling for clearer and fairer pricing for telecoms customers, because when it comes to basic necessities like a reliable mobile or internet connection, consumers deserve clarity. Read more about the campaign here. 

Read Which?’s research on the impact of mid-contract price hikes and benefit of pricing certainty here. 

Read Which?’s policy recommendations report, ‘Ensuring the price you see is the price you pay’, here. 

In August, Which? asked Ofcom to investigate potentially ‘unlawful’ Virgin Media contracts. More information here. 

Research

Which?’s calculations are based on the average amounts paid by customers in the consumer champion’s December 2022/January 2023 survey of a nationally representative sample of 3,897 adults aged 18+ who had a contract for a home broadband service (including broadband and phone).

This forecasting is based on a hypothetical customer paying the average amount when the March 31/April 1 price rises were instituted in 2023.

The estimate of CPI at 4.5% in January 2024 is a mid-estimate based on the Bank of England inflation quarterly forecasts in the August MPC Report (4.9% in Q4 2023 and 4.3% in Q1 2024). The Bank of England does not routinely forecast RPI inflation. Instead, the estimate of RPI at 6.5% is based on the percentage point differences between CPI and RPI over the past year according to the ONS inflation tables released monthly. This difference is also reflective of the average of external forecasts tracked by The Treasury, and the CPI and RPI forecasts from the Office for Budget Responsibility published in March 2023.

Following Virgin Media’s adoption of RPI + 3.9% price rises, Sky is now unique among major broadband providers in routinely raising prices in an ad hoc manner. Customers are given 30 days to exit for free when this happens, but like other providers, Sky customers face price uncertainty when considering deals.

Information on exit fee charges here. 

Table 1: Potential annual increase due to mid-contract hikes 

Table 2: Impact of inflation-linked price rises over the length of a contract

Figures are based around a hypothetical customer paying the average cost for that provider on a contract beginning in January 2023 (when our averages were taken). Which? has then calculated how much more that customer would end up paying over the course of their 18 or 24 month contract after two rounds of price rises. Contract lengths are based on what’s primarily currently advertised on provider sites.

Case study

Debbie Wylie, from Stevenage, has been a Virgin Media customer for over 20 years. When her previous broadband, landline and TV package expired, her bill rose from her usual £86.50 a month to £129 - this was likely due to a 'discount' expiring. 

Despite her expensive contract, Debbie was experiencing ongoing issues with her landline connection. She also received an email from Virgin Media offering a 25 per cent discount on her contract.

When she got in touch with the company to take up the discount offer and complain about her phone line, she struggled to get through over the phone and had to explain her situation over WhatsApp several times. She said: "Their customer service is absolutely atrocious."

When she finally got through to an agent they only offered a £25 discount on her contract - less than the 25 per cent discount she was originally offered over email. Virgin Media has since further reduced her contract to £94.25. 

Debbie's new contract allows for future mid-contract prices - meaning her telecoms bill will increase again in the Spring. She said: "The mid-contract price rise is higher than inflation which I think is fundamentally wrong. Thankfully they won't affect me too negatively as I am in a reasonably good financial position but obviously this isn't the case for everyone."

Right of replies 

A BT Consumer (also covering EE and Plusnet) spokesperson said: “We understand that price rises are never wanted nor welcomed but recognise them as a necessary thing to do given the rising costs our business faces.

“Our price rises are annual, contracted and transparent and we make this clear when customers sign up or renew their contract. With the average price increase just above £1 per week in 2023, and some of our customers exempt from the rise– we’re also doing all we can to ensure our services are accessible to the widest group of customers possible through our market leading social tariffs.”

Shell Energy Broadband provided clarifying comments which are reflected in the press release, but declined to provide a wider comment on the story.

A TalkTalk spokesperson said: “The regulated CPI-linked price rise in April 2023 was preventable. In order to prevent the same thing happening next April, we are again calling on Ofcom to act and reduce the wholesale increases that lead to these price rises. These are exceptional circumstances, and families and businesses across the UK need the regulator to act.”

A Virgin Media spokesperson said: “We are always clear and transparent with customers about any price increases. We wrote directly to all customers who received a price rise this year to notify them of their exact increase, and gave them the right to cancel without penalty within 30 days if they wished.

“While we know that price changes are never welcome, against a backdrop of rising costs, increased usage and continued investment, we have openly and directly set out to customers that we are introducing inflation-linked price changes from April next year. This widely used format will provide more certainty on when and how any future increases will occur while fuelling the investment required to ensure we keep providing the fast and reliable connectivity our customers rely on.”

Virgin Media also strongly refutes Which?’s claims that Virgin Media’s contracts could be unlawful. 

Vodafone declined to comment.