Ofcom must protect consumers from ‘fixed’ mobile phone hikes

Which? urges Ofcom to stand firm in the face of heavy lobbying from mobile operators and stick to its guns to allow customers to escape from unfair price rises in fixed mobile phone contracts.

Ahead of the results of Ofcom’s consultation on fixed mobile phone contracts, new Which? research finds that the majority of mobile phone customers do not know the rate that their so-called ‘fixed’ mobile contact can increase by.

‘Fixed’ mobile phone contracts allow operators to increase prices as long as it is not higher than the rate of inflation. However our new research reveals nearly half (45%) of mobile phone customers do not know what the Retail Prices Index (RPI) is and around eight in 10 (84%) do not know the current level of RPI, which is the key measure of inflation.

In the last year, every major mobile phone provider has increased monthly bills for fixed contract customers. Millions of customers have had to decide between accepting the rise or paying a penalty to exit the contract.

Our Fixed Means Fixed campaign, which has attracted more than 46,000 supporters, is calling for the price and all other aspects of mobile phone deals to remain the same for the minimum term of the contract. If prices rise, operators must allow people to switch providers without penalty – this was Ofcom’s preferred option when it launched its consultation in January.

Richard Lloyd, executive director of Which? said:

“Millions of mobile phone users are being caught out by unfair price rises because of clauses and technical terms buried in the small print of contracts.

“Ofcom must listen to the thousands of people who have supported our Fixed Means Fixed campaign, and stick to its guns and make sure fixed means fixed, or ensure customers faced with a hike can leave their contract without paying a penalty.”

Previous Which? research found that 70% of people on fixed mobile contracts didn’t know that operators could increase prices during the length of their contract.

Notes to editors:

  1. 45% of mobile phone customers do not know what RPI is and around eight in 10 (84%) do not know the current level of RPI: Populus surveyed 2,078 UK adults online between 9 and 11 August 2013. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules. The survey included 1,054 people who are currently on a mobile phone contract or considering buying one.
  2. 70% of people on fixed mobile contracts didn’t know that operators could increase prices during the length of their contract: YouGov interviewed 2035 GB adults online between 10th and 11th July 2012. Data were weighted to be demographically representative of all GB adults. Which? analysed the results of a sub-group of 1547 GB adults with mobile phone contracts.
  3. We submitted a formal complaint about fixed mobile phone contracts to Ofcom in July 2012.
  4. Our Fixed Means Fixed campaign is calling for the price and all other aspects of fixed mobile phone deals to remain the same for the minimum term of the contract. If there is a chance that prices may rise, operators must allow people to switch providers without penalty.
  5.  In a previous mystery shopping research, we found that phone shop staff don’t always make it clear to customers that their fixed term contract could rise in price. Even when mobile phone shop assistants were asked outright, 57% still maintained the monthly payment would stay the same for the contract’s duration.
  6. Ofcom is consulting on four options to protect consumers from price rises during fixed contracts. We expect the results to be published in September. In January Ofcom said it favoured Option 4 – changing the rules so that if prices rise on a fixed contract, customers can leave without paying penalties.  Further information on Ofcom’s announcement can be found here.
  7. List of mobile phone fixed contract price increases in last two years:

3 Sept 2011 – Vodafone rounded up price of its contracts to nearest 50p with effect from October 2011.

28 Nov 2011 – Orange announced 4.34% price rise for pay-monthly customers from Jan 2012.

28 March 2012 – T-Mobile announces 3.7% price rise from May 2012

21 May 2012 – Three Mobile increase contract prices by 3.6% – anyone who signed up before 8 March 2012 would see price hike from July 2012

28 Sept 2012 – Vodafone announces second price rise almost a year after first rise. It is a 2.4% rise for customers signed up before 7 September and effective from Nov 2012.

11 December 2012 – O2 is last major provider to increase prices – mobile line rental up by 3.2% from 28 February 2013

1 March 2013 – EE announces 3.3% price rise for Orange and T-Mobile customers

16 April 2013 – Talkmobile, a small provider owned by Carphone Warehouse, announces an up to 3% price rise for its fixed contract customers from 1 June 2013

28 June 2013 – Virgin Mobile announced 2.9% increase from July 2013.

 

 

 

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