Price rise or exit fee?
Today (24 January 2024) Which? released analysis showing that Virgin Media and O2 customers will be stuck between price rises and shocking exit fees this April.
The consumer champion has found that consumers are now faced with choosing between massive mid-contract price rises or substantial exit fees.
BT, EE, O2, Sky, Three, Virgin Media and Vodafone have all confirmed rises for this Spring. This is pretty shocking considering that this is on top of the hikes of up to 17.3% last year. If you started a two year standard contract for £20 a month at the beginning of 2023 you could soon be paying £25.
Companies are using RPI [1] as the basis for increasing prices and are failing to justify why they need to put prices up, when an efficiently-run business should be keeping prices stable.
Arbitrary and unnecessary increases
Which? said Virgin Media and O2 were
expected to go ahead with price increases of up to 8.8% this April – the latest RPI figure of 4.9%” and in the case of Virgin Media and O2 add a figure that Which? says is “an “arbitrary” 3.9% – the highest hikes in percentage terms out of any of the major firms.”
* Virgin Media customers face the largest hike – both as a percentage and in pounds and pence – out of any of the major broadband firms, due to the provider’s use of RPI. The average Virgin Media will see their annual broadband bill increase by £39.14.
* The average O2 SIM-only mobile customer faces a £26.44 annual price hike – the highest increase of any mobile network by percentage. This is higher in pounds and pence than EE and Three, although slightly less than Vodafone which has higher prices overall on average. It is also higher than the UK average of £20.76. O2 only ever bases its price increases on the airtime portion of a customer’s bill (i.e. minutes, text messages and data). If you have a contract that includes a phone too, the cost of the device will not increase.”
Ofcom’s consultation on proposals to ban inflation-linked in-contract price rises closed on 13 February 2024 and it plans to publish its final decision in spring this year: Ofcom proposes ban on inflation-linked mid-contract price rises – Ofcom.
The regulator is proposing an amended regulation requiring that any price change written into a customer’s contract needs to be set out in pounds and pence, prominently and transparently, at the point of sale. That includes being clear about when any changes to prices will occur.
BT / EE announced that it will change some of its pricing practices to comply with Ofcom’s proposals by this summer, replacing inflation-linked price increases: EE and BT’s new pricing structure for the future.
Any changes due to new Ofcom rules will not be in place until at least the Summer of 2024.
The Which? research showed that Virgin Media and O2 customers could be slapped with an exit fee of up to £692.37 if they have 12 months left on their contract. Virgin Media customers could see their annual broadband increase by £39.14 or be slapped with an exit fee of £403.91 if they leave their contract 12 months early.
An average O2 SIM-only mobile customer will see a £26.44 annual price rise. Which? found that this was the “highest increase of any network by percentage but slightly less than Vodafone, which has higher prices overall on average”.
Ofcom’s latest complaints figures showed Virgin Media was the most complained-about broadband, landline and pay-TV provider. It received just one star for customer service in Which?‘s annual broadband provider rankings.
Comment from Which?
Which? director of policy and advocacy, Rocio Concha, said:
Ofcom has clearly stated that the practice of inflation-linked mid contract price rise terms can cause substantial consumer harm. Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.”
Comment from Virgin Media O2
A Virgin Media O2 spokesman said:
2023 was a record year for traffic on our networks as customers used our mobile and broadband services more than ever.
Which?‘s own analysis shows that we continue to offer excellent value, with cable customers paying an average of just 10p more per day, and mobile customers facing an effective average increase of just 5p a day, for services they’re using almost constantly.”
Virgin Media putting the spin on Which?’s figures by giving the daily cost which they have rounded DOWN! The cost per day is 10.7p and even allowing for this leap year, 10.6p!
Virgin Media – Opinion from The Complaining Cow
As a Virgin Media customer it comes as no surprise to me whatsoever that it was the most complained-about provider across the broadband, landline and pay-TV categories, seeing significant rises in all those areas in Ofcom’s reporting January this year.
Virgin Media continually talks about investing and improving its service. But instead of cutting costs for consumers, it simply increases prices and also offers dreadful customer service.
Virgin Media are using those hikes to increase their profits year-on-year instead of passing anything back to customers, as can be seen in the graph here:
Source Statista
Mid-contract phone hikes
Ofcom Investigation
In January 2024 Ofcom released its latest figures regarding complaints about broadband, mobile, landline and pay-TV services.
Then, in July 2023, Ofcom announced that it was launching an investigation into customers’ difficulties cancelling contracts and how it had handled complaints on this subject.
What can you do about price rises?
Usually, if you threaten to leave a company, you’ll be made an offer. However, you can possibly get even better deals by negotiating. Do your research and work out how much your exit fee would be should you be charged one and see what other companies can offer and tell your current provider the price showing that even with the exit fee it is cheaper to leave.
See How to haggle to save the most money for lots of advice and tips on how to haggle.
How to save money on your Broadband and TV
See:
14 top tips for saving money on your landline, mobile & broadband,
Streaming services: How to cut subscriptions and save money
BBC Breakfast 26/07/22 saving on streaming services
How to complain effectively to telecom providers links to various posts regarding mobile, broadband, telecoms which will help you get refunds and redress.
References
- RPI is a measure of inflation, the change in the cost as a representative sample of goods and services published monthly by the Office for National Statistics.
