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Innovation

In-contract price rises costing consumers £90m a year, Which claims

The consumer campaign group has called for operators to avoid applying price hikes to 'trapped' customers for the duration of their contracts, and to make it clearer in ads that monthly charges can go up
Written by David Meyer, Contributor on

Mobile operators should not be able to raise their prices in the middle of customers' contracts without fair warning and without giving customers the chance to leave without penalty, the consumer campaign organisation Which has demanded.

Which launched a campaign called 'Fixed means Fixed' on Monday, timing it to coincide with a 3.6 percent price hike from operators Three. The group said it wanted the price and "all other aspects" of fixed contract deals to remain fixed for the duration of the contract — a period in which the customers usually cannot leave without paying some kind of fee.

The consumer group's investigations suggested that 70 percent of people on contracts had no idea that prices could go up during their term, and that "around 10.5 million adults [have been] affected by these price rises so far". According to Which, the total amount of money netted by UK operators through these unexpected rises is roughly £90 million, based on the fact that most of the price increases tend to be between three and four percent.

"These hidden price rises mean millions of people are forced to pay more than they expected at a time when household budgets are already squeezed. They are then trapped in a contract, unable to switch to a cheaper provider without paying a hefty penalty," Which executive director Richard Lloyd said.

Three's terms and conditions state that the operator can "increase the fixed periodic charges for your price plan (if applicable) by an amount which is more than the percentage increase in the Retail Prices Index Figure (or any future equivalent) in any twelve month period", without having to let the customer cancel their contract at no charge. This is a fairly standard clause.

The RPI, which is a measure of inflation, currently stands at 3.1 percent, so Three's price hike is indeed above it. [Update: Three has pointed out that it stood at 3.6 percent a few months ago.] However, Three says it has not raised its contract prices in the nine years it has been in business.

Price increases are never welcome, so this is our first for contract voice customers in our nine years of operation," a company spokesman said in a statement given to ZDNet UK. "It's in line with inflation and lower than price increases from other mobile networks. To give an example, on a £15 a month contract it is a rise of just 54 pence. We believe our offers remain good value."

Which has made a formal complaint to the telecoms regulator Ofcom, calling for clearer marketing and fairer terms.

"We want the price and all other aspects of fixed deals to remain the same for the contract period when consumers are also tied in," Which said. "If there is a chance that prices may rise, operators must be more upfront about this in their advertising and allow people to switch providers without penalty."

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