The situation adds insult to injury for customers of the big four providers – EE, Vodafone, Three and O2 – who could be paying £160 per year more than the equivalent deal would cost with a smaller network, even before inflation increases are factored in. Customers could also be ‘inflation-proofed’ by not being locked into a lengthy contract.
We’re launching a campaign calling on providers to end unpredictable hikes that we believe that unfairly penalise consumers and for the telecoms regulator, Ofcom, to ban them altogether.
How much could mobile prices increase in 2024?
The big four mobile networks, who share two thirds of UK customers, all increase the price of their contracts in April each year. They calculate this using the rate of inflation, plus 3.9%. Some smaller networks, including BT Mobile, iD Mobile, Talkmobile and Tesco Mobile, also hike their prices based on inflation.
With many mobile contracts lasting for 24 months, it’s almost impossible to predict how prices will increase over the duration of the contract, and for customers who stay with the same provider after their contracts end, costs will continue to spiral.
Providers that use the Consumer Price Index (CPI) to calculate increases are likely to raise prices by more than 8% in April 2024. For many, this will add to the increase of more than 14% they received in April this year.
been criticised as an inaccurate measure of inflation by the Office for National Statistics (ONS).April 2024 price rise, 12-month unlimited data Sim-only contract
Impact of increases over the course of a contract
We also looked at the cumulative impact of April 2023 and April 2024 price increases on a 24-month contract, showing how much extra the contract will cost in total after two price increases.
We analysed both unlimited data deals and the lowest amount of data above 8GB – the approximate average monthly use as determined by Ofcom –from each network, to show how customers with different needs could be impacted. We found that these unpredictable price increases mean some customers could pay as much as £124 more over the course of their contract. EE and O2 mobile customers are likely to face the highest average extra cost.
April 2023 and 2024 price rise, 24-month Sim-only contractsWe conducted further analysis that shows long contracts from the Big Four providers aren't cost effective. The unlimited data 24-month contracts highlighted above cost from £22 to £28 per month, even before inflation increases their price every year.
Meanwhile, rolling unlimited data contracts are available for as little as £18 per month from smaller networks, which also give you the flexibility to switch if prices rise.
Five cheaper alternatives for an unlimited data Sim-only dealBased on our analysis, customers could pay as much as £10 a month less for their Sim-only deal by switching, even before potential inflation increases are taken into account on longer contracts.
Unpredictable mid-contract price rises must be banned
We believe it is unfair and, in some cases, potentially unlawful for consumers to be signed up to deals that don't give them certainty about how much they can expect to pay over the course of their contract, especially given exit fees can be punitive.
That’s why we’ve launched our campaign The Right to Connect. We're calling for clearer and fairer pricing for telecoms customers and an end to unpredictable mid-contract price hikes.
It’s a position that’s backed by consumers – in separate research we’ve found that around 8 in 10 people that mid-contract price hikes are always unfair, and people overwhelmingly value pricing certainty for their telecoms contracts.
Ofcom is currently reviewing inflation-linked mid-contract price rises amid concerns that they don't give consumers sufficient certainty and clarity about what they can expect to pay. It's due to publish its consultation on this issue in December.
Providers should do the right thing by stopping this practice ahead of Ofcom’s final decision, to ensure that customers aren't impacted by price rises next April.
In the longer term, Ofcom should ban these unpredictable mid-contract price hikes as they unfairly penalise consumers.
Rocio Concha, Which? director of policy and advocacy, said:'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 unjust 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.'
Our research
All our calculations are based on a snapshot analysis of data from mobile network websites (for 12-month Sim-only contracts and rolling unlimited data contracts) taken in October 2023 and industry database information for prices in November 2022 (for 24-month Sim-only contracts).
Our forecasting is based on a hypothetical customer paying these amounts when the 31 March/1 April 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 quarter 4 2023 and 4.3% in quarter 1 2024). The Bank of England doesn't 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.
How the providers responded
EE 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, and two million pay-as-you-go customers were excluded from price changes in 2023 – 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.’
O2 told us: ‘We're always clear and transparent with customers about any future price increases, which are reinvested back into our network to meet significantly increased demand for our services. While we know that price changes are never welcome, this year bills increased by an average of 10%, or less than 10p per day, which is below inflation, and reflects the fantastic value we provide for fast and reliable connectivity that is used almost constantly.’
Vodafone told us: ‘It's too early to make any comments on next year's figures. We will continue to ensure customers registered as financially vulnerable can stay connected by offering social mobile and fixed tariffs – these aren't affected by any price increases.’
Three provided clarifying information, but declined to provide a wider comment.
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