Broadband customers trapped by choice between huge mid-contract price hikes or exit fees of over £200, Which? warns 

Which? is calling on telecoms firms to let customers leave without penalty if prices are hiked mid-contract, as new research shows that many broadband customers are trapped in a lose-lose situation where they either have to accept exorbitant mid-contract price increases or pay exit fees of over £200.

Many broadband firms – such as BT, EE, Plusnet, Shell Energy Broadband, TalkTalk and Vodafone – raise prices every April in line with the Consumer Price Index (CPI) plus an additional 3 to 3.9 per cent. These price increases are often applied mid-contract and mean people end up paying more than they originally signed up for.

Based on figures from Which?’s latest broadband survey, the consumer champion has calculated how much an in-contract BT, EE, Plusnet, Shell Energy Broadband, TalkTalk and Vodafone customer could see their payments rise by.

This year, many customers are facing mid-contract price hikes of more than 14 per cent. BT Group, which includes BT, EE and Plusnet, has already announced that they will not intervene and will go ahead with price rises of 14.4 per cent for the vast majority of their customers. The average EE customer would see the largest potential annual increase of £66.89. This is closely followed by BT customers who could pay an extra £65.59 a year.

Vodafone, TalkTalk and Plusnet customers could pay an extra £54.86, £54.22 and £52.67 a year respectively. Shell Energy Broadband customers could see the lowest increase of this group – but still an eye-watering £49.51.

Given many of these customers already saw their broadband bills increase by nearly 10 per cent last year, this is another blow for those looking to keep spiralling costs under control. As broadband contracts typically last for 18 or 24 months, customers do not know how much prices could rise by when they sign up.

Ofcom rules state that telecoms providers must offer their customers the right to exit their contract penalty free if they are subject to unexpected price rises which are not provided for in their contract.

But because mid-contract price rises are written into the terms and conditions of some people’s contracts, Ofcom’s rule is that in those cases the customer does not have the right to exit penalty free  – meaning customers have no choice but to accept the new higher price or pay an exit fee to terminate their contract.

However, the rules do require the relevant terms to be set out prominently and transparently, at the point of sale. Ofcom is currently investigating whether in-contract price rises were set out clearly enough by phone and broadband companies before customers signed up.

Which? calculated the exit fee the average customer of each provider with 12 months remaining on their contract would face if they left early. BT customers face the highest exit fees of £219.04.

This is followed by Shell Energy Broadband, EE and Plusnet customers, who would pay £160.20, £150.49 and £144.75 respectively. Vodafone and TalkTalk customers would pay the lowest exit fees of £123.72 and £122.40 respectively. Shell Energy Broadband and TalkTalk have fixed exit fees, while the others are calculated based on the average monthly price customers pay according to Which?’s broadband survey.

A good broadband connection is essential to modern life. Which? is calling on all providers to carefully assess what level of mid-contract price rises can be justified in the current economic climate and allow customers to leave their contract without penalty if prices are hiked mid-contract – regardless of whether or not these increases can be said to be ‘transparent’.

While Sky and Virgin Media have not announced this year’s approach to price increases, they traditionally allow their customers to haggle or switch when notified of such hikes.

Other providers commit to keep prices the same for the duration of people’s contract. For example, Zen Internet, Hyperoptic and SSE all promise not to raise prices during people’s minimum contract period.

While these are all important steps in the right direction, all providers need to step up and play their part to support their customers through the cost of living crisis. Consumers should not be left trapped in unaffordable contracts – and should be able to leave without penalty if they do not want to stay with their current provider or haggle for a better offer if they prefer to stay with their provider.

Rocio Concha, Which? Director of Policy and Advocacy, said: 

“It’s hugely concerning that many broadband customers could find themselves trapped in a lose-lose situation where they either have to accept exorbitant – and difficult to justify – mid-contract price hikes this Spring or pay costly exit fees to leave their contract early and find a better deal.

“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.

“With many households struggling to make ends meet, it is completely unfair that people are trapped in this situation. Telecoms providers need to step up and play their part to support their customers through the cost of living crisis.”

ENDS 

Notes to editors 

Which? cost of living campaign

The consumer champion recently launched a campaign calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis.

Read more about the campaign here and more about Which?’s calls on businesses here.

Research

Based on the average amounts paid by customers in a December 2022/January 2023 survey of 3975 people who had a contract for a home broadband service (including broadband and phone). Data includes a nationally representative sample plus a provider boost approach for brands with low sample sizes.

Shell Energy Broadband reserves the right to increase prices by CPI+ ‘up to 3%’.

Exclusions will apply for social tariffs and some financially vulnerable customers.

Projected 2023 increases

*CPI plus ‘up to 3%’

Exit fees for each provider 

BT: £219.04

EE Broadband: £150.49

Plusnet: £144.75

Shell Energy Broadband: £160.20

TalkTalk: £122.40

Vodafone: £123.72

To calculate the exit fees payable for broadband consumers, Which? took a hypothetical consumer who has 12 months remaining on their contract at the point where prices are set to rise. This makes the figures for annual price increases and exit fees comparable.

Calculations for BT, EE, Plusnet, Vodafone are all based around exit fees faced by a customer paying the average amount as per our nationally representative survey. For these companies, Which? followed the example calculation for early termination charges displayed on their website, which is:

• Price paid per month x number of months remaining

• Remove VAT

• Subtract business cost savings

• Subtract discount for early payment

• Apply VAT

To get representative figures, Which? substituted in our average price paid per provider, and scaled the business cost savings deducted according to the difference between this price and the example price.

TalkTalk and Shell Energy Broadband have fixed exit fees which were calculated for a customer with 12 months remaining at the point where prices rise. TalkTalk charges £10.20 per remaining month for the majority of tariffs.

Shell Energy Broadband charges exit fees of £6.50, £16.50 and £18.50 but the majority of its customers are on tariffs which charge exit fees of £6.50 or £16.50 a month. The average Shell Energy Broadband customer faces an exit fee of £13.35 per remaining month.

Which?’s top tips for consumers who are facing mid-contract price hikes

If you’re struggling to pay your bills, speak to your broadband, landline or mobile phone provider. The major telecoms providers have all agreed to better support customers during the cost of living crisis.

Certain customers are also eligible for special discounted broadband deals, so read our guide to broadband social tariffs to find out more.

Rights of replies

A BT Consumer (covering BT, EE and Plusnet) spokesperson said: “With the December 2022 CPI rate now announced, we can confirm our price change will be going ahead on 31st March. 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 3 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.

“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.

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

Shell Energy Broadband said: “Our terms allow for a price increase no higher than CPI + 3%. As ever, our customers will be the first to hear about any change in prices.

“We recognise the budget pressures our customers are experiencing, and we will do all we can to help customers who are struggling to pay. We have a £20m Helpfund to support the most vulnerable, and we will assist with payment plans or moving customers to a cheaper tariff whenever possible.”

A TalkTalk spokesperson said: “This regulated CPI-linked price rise is preventable. There is still time for Ofcom to act and reduce the wholesale price increases that lead to these price rises. These are exceptional circumstances, and families and businesses across the UK need the regulator to act.”

Vodafone declined to comment. 

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

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