Prepare for huge UK broadband and mobile price hikes in 2022
Soaring UK inflation threatens to lead to one of the biggest annual price increases for broadband ISPs, phones, cellphones and calls in years, potentially affecting customers of BT, EE, Plusnet, Vodafone, O2, TalkTalk, Shell Energy, KCOM and others with increases of around 9% between March and April 2022 (double the usual level).
Annual price increases are of course not new to this market, like many others. There are often legitimate reasons for prices to rise, not least because ISPs frequently add all kinds of new services (e.g. FTTP), develop new systems, face higher fees from providers, put costly new Ofcom rules are implemented and consumers are also gobbling up a lot more data each year.
In short, improving services and meeting growing demand can be a costly challenge, which means that in the end, customers will often end up paying more. But the way communications providers explain this can vary like the wind, with the related contractual terms often appearing to change more frequently than the tousled locks of Boris Johnson’s hair.
For example, over the past two years, all of the aforementioned suppliers have linked future price increases to the rate of inflation – Consumer price index (IPC) – annually. As a result, almost all of the named vendors typically inform customers that they will increase prices by a fixed rate of 3.9% (3.7% on TalkTalk and “up to” 3% on Shell Energy) + the rate. CPI inflation as published in January of each year (February for O2).
REMARK: O2 adopts the different Retail price index (RPI) instead of the IPC.
One problem with this approach is that new or upgrading customers will now be aware of any future increases when they join, which is a good thing but makes it more difficult to use the rule of thumb. ‘Ofcom against mid-contract price increases (GC1.6). This applies when an increase constitutes a “material damage”At your service, such as those who exceed the inflation level (ie offering you the possibility of exiting an existing contract without penalty).
Additionally, most vendors are also adopting dual standards with their x% + CPI approach. In other words, they are happy to pass any increase in CPI or RPI on to their customers, but if inflation ever turns negative, none of them would pass those savings on to consumers (that is – i.e. they would just charge the x% figure without the CPI / RPI change).
The inflation nightmare of 2022
Last year, the aforementioned approach to inflation-linked price hikes saw linked broadband and mobile operators increase their prices by around 3.9% + CPI by 0.6% (c ‘ i.e. a total annual increase of 4.5%) in the spring, which was not that different from the old model of static annual increases – this tended to result in annual increases of 4-6% (generally notified to customers 1 month before implementation).
However, since January 2021 there has been a dramatic and sustained increase in inflation. Much of this is due to rising fuel and energy costs, as well as broader supply and demand issues that have driven prices up in other areas. The latter has also been impacted by the higher cost of post-Brexit trade and a rapid return to normal post-COVID19 economic activity, etc.
As can be seen above, the CPI figure for October 2021 (as released in November) reached 4.2% (RPI reached 6%) and some reports indicate that it could peak at around 5%. Forecasts suggest that the CPI will continue on this trend for at least the next few months, meaning the rate due to be released next month – the one most ISPs will use to adjust their price hikes – likely won’t be. dramatic. less than around 4% (compared to just 0.6% last year).
REMARK: Since the preparation of this article, the CPI figure for November 2021 has been released, which reached 5.1%!
In other words, most of the aforementioned suppliers currently seem poised to introduce an annual price increase of around 8% and probably more, which is about double the total increase of around 4.5% in l ‘last year. Granted, such a high degree of inflation will also come at additional costs for ISPs, but there’s no denying that consumers are sure to feel the impact on their bills next year.
Customers of O2, which uses the slightly different 3.9% + RPI model, may face an even more dramatic increase if RPI continues to rise above 6%. Meanwhile, Sky Broadband (Sky Mobile), Virgin Media and Three UK currently seem to still be adopting the old method of static annual price increases (for example, Three UK has already informed its customers that their prices will increase by 4.5%. in April 2022).
Ofcom is unlikely to help here because their Equity commitments, which are supported by most of the major broadband and mobile phone providers, simply requires that signatories “offer customers packages that … have a fair pricing approach“And ensure”the prices are clear and easy to understand. “But the language is ambiguous and does not specifically address price increases, in addition to being more intended for”vulnerable“users.
Alternatively, customers can try to contact their ISP directly and haggle for a lower price when a hike hits (Retentions – Tips to Reduce Your Broadband Bill), although your mileage may vary. Likewise, there are still suppliers, often smaller players, who do not play the game of annual price increases or who are much more transparent with their policies.
Last year, we took an instant poll of 300 of our readers, who were wondering which approach to annual price increases they would reluctantly favor. Most respondents (54%) voted for a fixed increase of around 4-6% each year, provided this is clearly stated in the contract. In comparison, only 30% were happy with the old approach of surprise annual hikes (it can range from 2% to 6% +, you never know until the ISP announces it) and only 16% liked it. the current method x% + CPI.