BT, one of the leading telecom companies, has decided to cancel their previous practice of implementing price hikes higher than the inflation rate for their mobile and broadband consumers. However, they will still be implementing a final price increase for this year before making the change.
The owner of EE, a mobile operator, has taken action to address the burden on consumers caused by the increase in household expenses during the current cost of living crisis. This comes after telecoms companies faced criticism for raising their prices.
Last year, a Guardian investigation revealed that major mobile and broadband companies in the UK were accused of contributing to “greedflation” by implementing price increases that exceeded the rate of inflation.
EE announced that starting next year, customers will be informed of the exact amount of their monthly bill increase in pounds and pence.
The decision was made one day prior to the release of the official inflation rate for December. This rate is typically used by companies to determine price increases for customers mid-contract.
Experts predict that the upcoming price increases will contribute approximately £500 million to the total cost for consumers starting this spring.
The companies BT, Vodafone, Virgin Media O2 and TalkTalk all utilize a form of the system that typically incorporates the consumer prices index (CPI) inflation measure with an additional 3.9%.
Virgin Media O2, on the other hand, utilizes the greater amount of retail price inflation (RPI) based on the rate released for January.
In the previous year, the majority of mobile and broadband prices increased by 14.4%. However, customers of Virgin Media O2 experienced a higher increase of 17.3%. This was calculated using the CPI figure of 10.5% from December 2022 and the RPI of 13.4% from January 2023.
It is expected that this year’s December Consumer Price Index (CPI) will be around 4%, while the Retail Price Index (RPI) for January is projected to fall between 6.5%.
This action, occurring prior to Ofcom’s ban on telecom companies increasing prices in the middle of a contract in line with inflation, will place competition on BT’s competitors who also utilize this practice.
According to Marc Allera, the CEO of BT group’s consumer division, discussing our annual price change with customers is always a difficult task, especially during times of financial strain. However, we have acknowledged this and will now provide a straightforward representation of any changes in terms of monetary value.
According to BT, in 2025, mobile customers may see a monthly rise of £1.50, while broadband customers could experience an increase of £3, depending on their individual contract terms.
According to a study conducted by the consumer association Which?, telecommunications companies are projected to earn £488 million from the price increases during the middle of contracts this year.
The act is prohibited in other areas of utility, such as electricity and gas.
Kester Mann, director of consumer and connectivity at CCS Insight, praised BT’s intelligent decision to prepare for a potential ban on inflation-linked pricing. This comes after Ofcom initiated a consultation on the contentious practice in late 2020.
“Before other operators also adopt this practice, it allows the operator a limited opportunity to demonstrate a more transparent and upfront approach, setting them apart from their competitors.”