New Ofcom rules backfire on consumers...

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New Ofcom rules aimed at stopping inflation-linked rises to broadband, mobile and pay TV bills may lead to customers seeing even bigger rises



Some of the UK’s biggest broadband internet, mobile and pay TV providers are preparing some of the biggest ever price rises this spring, following the introduction of new Ofcom rules which look set to backfire on consumers with new contracts.

Ofcom stepped in after companies including EE, Vodafone and Virgin Media started to introduce mid-contract price rises that were linked to inflation. Most companies used a formula to add 3.9% on top of the inflation figure released in January. When inflation soared in 2022, it led to some customers receiving price rises of nearly 20%.

However, under the new rules, which apply to new contracts, some customers will see price rises of more than triple the rate of inflation. Some mobile deals will increase in price by over 20%, despite the current rate of inflation sitting around 3% (latest figures due to be released on Wednesday 15th).

And it’s users on low incomes, but just above the benefits threshold to qualify for special tariffs, who are set to bear the biggest percentage increases, while customers who can afford expense top-tier packages will enjoy lower proportional increases.

The price rises are due to be implemented this April.

Rises will disproportionately affect some users

With the exception of Three mobile, which will be increasing prices based on how much data is included in a plan, other mobile and broadband providers that have announced their new price rise formulas are doing a flat rate increase.

Someone with a provider that’s implementing a £3 flat rate increase will pay that regardless of whether they take a £25 plan or a £75 plan.

This means the percentage increase will be greater for those taking up cheaper packages.

Based on a £3 flat rate increase, a value £25 broadband service increases by 12%. A top tier £75 gigabit connection will increase by just 4%.

But those taking cheaper packages might be poorer households, needing to watch the pennies. The higher percentage price rise will therefore disproportionately affect them.

The good news is that social tariffs provide a safeguard for the poorest, as these tariffs will be exempt from the rises. Ofcom has urged providers to do more to raise awareness of these tariffs.

However, there’s a substantial number of households just above the benefits threshold who won’t qualify. Situated between the poorest who qualify for social tariffs and richer households, they become the financially squeezed middle.

New Ofcom rules apply to new contracts.

If you are still on an old contract, you may still be subject to the old inflation+3.9% price rise formula. If you renew your contract under new terms, you will then move to the new price change regime.