Price rises for broadband, mobile and paid TV contracts will be capped at £1-4 per month from today, bringing more transparency for customers. But while the new rules offer certainty, they also mean consumers may miss out on potential savings if inflation drops.
Today, new 'pounds and pence' price rise rules become mandatory for broadband, paid TV and mobile providers. Mid-contract price rises have been long bemoaned by customers, with providers previously increasing rates in April based on inflation (and a bit more - around 4% - on top).That's led to uncertainty about how much contracts could rise, making budgeting difficult for households across the country.
But from today, if you take a new broadband, mobile or paid TV contract out, your provider must lay out exactly how much of a rise to expect - in pounds and pence. Price rises will be between £1-4 per month. Customers with older contracts may still see price increases based on inflation, so looking to switch contracts is a good idea if you want to avoid that.The regulator, Ofcom, put the new rule into place after some customers saw their bills rocket nearly 20% in October 2022 after Liz Truss's disastrous mini-budget put the economy into freefall. An Ofcom spokesperson said: 'Inflation might be low now, but as we've seen in recent years, it can be incredibly volatile, and we don't think consumers should bear that risk.'Our intervention means customers will have certainty and clarity upfront about the prices they will pay, so they can compare offers and select the best deal for them.'The negatives While the cap brings a bit more certainty for consumers, it also means customers won't be able to benefit if inflation drops.For example, if you pay £24.99 a month for broadband and your contract increases by £3, it's more expensive than what it would be with an inflation-based rise of 6.5% - which would come out to around £1.62, explains Andrew Ferguson, editor of thinkbroadband.com.Those on more expensive contracts will likely benefit the most, he added, with entry-level broadband and mobile users paying proportionally more than those on premium offerings. On top of that, Uswitch has warned the new rule is effectively a 'transparency tax for consumers'. 'Despite Ofcom's new rules, costs can still rise by whatever price is set out by their provider when they sign up,' Ernest Doku, telecoms expert at the company, said. 'Many providers have now opted for a blanket flat-rate annual price rise that will be even higher than the inflation-linked approach for the average broadband customer.''If you're on a cheaper or average-priced contract, the luxury of knowing what your exact price rise is in advance, comes at the cost of an even steeper bill hike - effectively a 'transparency tax' for consumers.
Broadband Mobile Tv Price Rises Ofcom Inflation Transparency Contracts
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