Why are broadband and mobile prices rising by 14%?

Consumers urged to haggle as suppliers raise costs in line with inflation

Households already struggling with the cost of living crisis this winter could now see their broadband and mobile phone bills rise by as much as 14 per cent from April, industry experts have warned.

Telecoms companies typically link annual mid-contract price rises to the rate of inflation reflected in January’s consumer price index (CPI) or the retail price index (RPI).

Despite the Office for National Statistics reporting that the former had dropped slightly to 10.5 per cent in December this week, both measures are at their highest levels for 40 years, with the latest RPI rate at 13.4 per cent.

BT, EE, Plusnet and Vodafone broadband deals all reportedly permit price rises in line with CPI plus 3.9 per cent while TalkTalk’s stated increase is CPI plus 3.7 per cent.

Sky Broadband and Virgin Media contracts allow similar increases but do not specify a pricing formula in the same way as their rivals.

BT has already confirmed its increase for this year at 14.4 per cent.

“With the December 2022 CPI rate now announced, we can confirm our price change will be going ahead on 31,” a BT Consumer spokesman said on Thursday.

“We expect the average customer will see their price rise around £1 per week. This price rise doesn’t apply to all our customers. Over three million customers across our BT Home Essentials, EE Mobile Basics, PAYG, BT Basic, landline-only and Home Phone Saver will have their prices frozen through 2023.

“Although telecoms bills remain a small fraction of total average household spend, we know that everything adds up. We take seriously our responsibility to ensure our services are accessible to the widest group of customers possible through our market leading social tariffs.

“We are balancing our own rising costs due to high inflation and making vital digital infrastructure investments for the UK.”

Ernest Doku, a broadband expert with Uswitch, commented: “Millions of mobile and broadband customers will now know the scale of the bill increases they face this spring.

“This means many telecoms customers can expect to see their mobile and broadband bills rise by at least 14 per cent in April.

“Providers are taking different approaches to price rises this year so consumers should pay close attention to their contract terms.”

Although suppliers can opt to withhold part of the increase, customers can expect further price hike announcements from other providers before April, with companies required to give 30 days’ notice prior to implementation.

Consumer groups are already calling on households who are out of contract to use this as a catalyst to move to a new deal.

TV money-saving expert Martin Lewis recently warned viewers of his ITV evening show that such hikes were coming and urged them to be prepared to switch providers or haggle with their existing supplier for a more favourable deal.

A recent poll by Mr Lewis’s MoneySavingExpert site revealed a success rate of more than 75 per cent when haggling with TalkTalk, Virgin and Sky, plus “high success rates” at other broadband providers.

Mr Doku endorsed the same approach and added: “If you are worried about how these price rises affect you, review the terms and conditions of your contract or double-check with your provider to see what might be in store.

“Consumers cannot predict the scale of these rises when they sign up for a deal, which places all of the risk onto them. We firmly believe providers who impose inflationary increases should allow customers to leave their contract early without penalty, or offer contracts where the price remains fixed for the duration.

“Customers who find themselves facing rises should also be ready to vote with their feet. If you are out of contract on your deal, now is the perfect time to refresh your deal or move to a new provider altogether.

“If you have less than six months left on your contract, you may find it pays to make an early switch. While many providers will charge you an exit fee for leaving a deal early, the cost of your remaining term could be less than you would save by taking out a cheaper offer.

“According to Uswitch data, broadband customers on average can save £162 a year by switching their provider, while customers on pay-monthly mobile deals can save an average of £321 annually by moving their handset over to a SIM Only contract.”

An Ofcom spokesperson said: “While Ofcom doesn’t 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 are sticking to this.

“We’re also concerned about the transparency of inflation-linked price rises in contracts, and how well they’re understood. We’re examining this issue to ensure customers’ interests are protected.”

Additional reporting by agencies