The UK’s biggest telecoms firms are being urged to allow customers to exit contracts penalty-free after it emerged they are due to impose their biggest price increases ever – over 14% – from April.
BT, EE, Plusnet, Shell, TalkTalk and Vodafone are all on track to increase home internet bills by the inflation busting figure – adding about £60 a year – but most customers are on fixed-term contracts with break-clause fees of up to £219 if they try to leave.
The consumer group Which? said the increases could not come at a worse time and is calling on the telecoms providers to “step up and play their part to support their customers through the cost of living crisis”.
This April’s hike will be on top of a 10% increase last year. Only those on social tariffs look set to be spared the higher bills.
Little-known clauses in terms and conditions allow the broadband and mobile phone firms to raise prices each year by December’s consumer prices index (CPI) measure of annual inflation, which was 10.5%plus an extra 3%-3.9% on top.
These clauses were added to contracts in 2021 when inflation was running at 1.5%, but with inflation running at a 40-year high, they are now going to deal a heavy blow to strained household budgets.
The issue is a particular problem for home internet bills, where the vast majority of deals are fixed-term. Many mobile phone customers on multi-year contracts will also be affected, but the prevalence of pay-as-you-go arrangements means the picture is less clear cut in that sector.
Which? said the average broadband customer for EE would see the largest potential annual increase – £67. This is closely followed by BT customers at £66 a year. Vodafone, TalkTalk and Plusnet customers are set to pay over £50 a year more respectively.
The consumer group said customers who want to leave deals early face exorbitant penalties of £145-£220, meaning most customers will have no option but to absorb the increases. BT has the highest exit fees of £219, it said.
Sky and Virgin Media contracts allow mid-contract price increases, but they do not stipulate a pricing formula in the same way as rivals, meaning customers will probably be given the option to switch away.
Rocio Concha, Which? director of policy and advocacy, said: “Which? is calling on providers to let their customers leave without penalty if they face mid-contract price hikes. Providers should also carefully consider the level of any price rises when many consumers are already under huge financial pressure.”
Martin Lewis, the consumer champion, said his heart sank last Wednesday, when the latest CPI inflation was announced. He has called on the regulator Ofcom to act on this, although he said he “doesn’t hold out much hope”.
“Above-inflation mid-contract rises are unfair and they push future inflation higher,” he said.
The telecoms regulator Ofcom is investigating whether companies are ripping off mobile and broadband customers by not telling them about the above-inflation rises when they sign their contract.
A spokesperson said: “While Ofcom does not set retail prices, companies must treat customers fairly – particularly during an exceptional period of hardship for many households. Our rules are clear: everyone must be told upfront about any future price rises before they sign up, and we’re investigating whether phone and broadband firms [have been] sticking to this.”
A spokesperson for BT Consumer, whose brands include BT, EE and Plusnet, said: “With the December 2022 CPI rate now announced, we can confirm our price change will be going ahead on March 31. We expect the average customer will see their price rise around £1 per week.
“This price rise doesn’t apply to all our customers… Customers who are struggling financially and are eligible for Home Essentials can move penalty free at any point in their contract, this also includes EE and Plusnet customers.”