Fixed must mean fixed on mobile phone contracts

Which? has launched a new ‘Fixed Means Fixed’ campaign calling for an end to price increases on ‘fixed’ mobile phone contracts.

A Which? investigation revealed that many mobile operators use clauses hidden in the small-print to increase rates during the contract period. Our research found 70% of people on fixed contracts did not know that mobile phone companies could increase prices during the length of their contract.  We estimate that these price hikes could be netting the industry up to £90 million in a year.

Today Three mobile becomes the latest mobile operator to use this tactic, increasing its ‘fixed’ prices by 3.6% which will affect over 1 million customers. Mobile operators, including Vodafone, T Mobile andOrange, have hit consumers with a series of price rises over the last year all on ‘fixed’ contracts.  In all these cases consumers have been unable to cancel their contracts without paying a penalty.

Which? has submitted a formal complaint to Ofcom, asking the regulator to urgently investigate this issue and rule that ‘fixed means fixed’.  We want the price and all other aspects of fixed deals to remain the same for the contract period when consumers are also tied-in. If there is a chance that prices may rise, operators must be more upfront about this in their advertising and allow people to switch providers without penalty.

Which? executive director, Richard Lloyd, says:

“These hidden price rises mean millions of people are forced to pay more than they expected at a time when household budgets are already squeezed. They are then trapped in a contract, unable to switch to a cheaper provider without paying a hefty penalty.

“Ofcom must intervene now and stamp this out.  Consumers must be confident that fixed really does mean fixed.”

This campaign has been driven by over 1,700 comments from consumers about increases to ‘fixed’ contracts on our Which? Conversation website. People can support the Which? campaign by adding their name to an e-pledge at www.which.co.uk/fixed.

Notes to Editors:

Fixed Term Contract:  

Mobile phones may be supplied on a pay-as-you-go or a contract basis.  Which?’s complaint concerns contracts.  Contracts may be forSIM-only or include a handset.  In both cases a minimum contract period may apply, which ties the consumer into the deal.  These periods can range from 12-24 months with 24 months the most common (held by 68% of customers according to Ofcom).

Contracts include the use of voice, texting and data.  The amount of minutes, texts or data allowance will often be set and fixed when the consumer takes the service.  The cost of a handset may also be included.  If customers try to end the contract early, within the minimum fixed term, they may face an early termination fee.

Many of the terms and conditions of these contract includes a clause that allows prices to be changed, but only an amount up to the retail price index (RPI).  Operators argue that this change is not ‘materially detrimental’.  In the case of Vodafone, it adopted a policy of rounding up charges to the nearest 50p and doubling the cost of data outside of any agreed package.

Breakdown of Complaint:

Four mobile operators have increased charges to customers:

Which? has estimated that as many as 10.5 million customers may have been affected by these changes, with additional revenue to operators so far of £34.5 million and as much as £90 million annually.

We want to see prompt and firm action by Ofcom.  We think two things should happen:

• During the fixed term, the quality[1] and price must remain fixed; as set out for the consumer at the beginning of the contract: fixed means fixed.
• Mobile phone operators that wish to retain the right to vary terms, including the price, during the fixed term, must allow consumers to end the contract after being notified of such a change without penalty.  Any marketing material in these cases must prominently state that prices or other terms may vary during this contract.

Press Release: Consumer, Money, Personal Finance, Retail, Technology