How is the CPI increase legal? 13 June 2022 at 9:25AM in Broadband & internet access 7 replies 201 views

simonr91

I know this happens every year and it's usually the telco providers that are the worst culprits for this.

However, if their reasoning is:
"|Price rises are never popular, but are sometimes a necessary part of business, if we’re to keep up with the rising costs we face and ensure we can continue to deliver a brilliant network experience as customers’ usage of data grows month on month.|"

Then how come a new customer is paying less?

Example:
If you signed up to BT Full Fibre 900 in 2021, you'd have contracted at £59.99 a month. The CPI increase +3.9% brings you now to £65.56, but if you sign up today it's £55.99.

Blows my mind that this is legal and seems like something we should lobby about!

QrizB

simonr91 said:

Blows my mind that this is legal and seems like something we should lobby about!

What exactly do you think is wrong with a consumer being able to contract for broadband in a regulated market?

Example:

If you signed up to BT Full Fibre 900 in 2021, you'd have contracted at £59.99 a month. The CPI increase +3.9% brings you now to £65.56, but if you sign up today it's £55.99.

Anyone who signed up in 2021 will have agreed that £59.99 increasing by CPI+3.9% annually was a fair price to pay for the service being provided. The price for an equivalent service commencing today is immaterial.

Sandtree

simonr91 said:

Blows my mind that this is legal and seems like something we should lobby about!

Well do it, but the idea of new customer discounts is pervasive across almost all industries... though it has just been banned from Car and Home insurance.

Banning it however generally creates a mid point pricing and so those that are financially astute and switch providers regularly end up paying more (some of which will be vulnerable customers) and those that stay with the same provider for decades are generally slight better off (many of which are older customers who may also be vulnerable) 

onomatopoeia99

Sandtree said:

simonr91 said:

Blows my mind that this is legal and seems like something we should lobby about!

Well do it, but the idea of new customer discounts is pervasive across almost all industries... though it has just been banned from Car and Home insurance.

Banning it however generally creates a mid point pricing and so those that are financially astute and switch providers regularly end up paying more (some of which will be vulnerable customers) and those that stay with the same provider for decades are generally slight better off (many of which are older customers who may also be vulnerable) 

Some of the latter customers will be people with MH conditions that make using the telephone a difficult or impossible proposition, so are actively discriminated against by organizations that offer lower prices to people that can.

Marvel1

onomatopoeia99 said:

Sandtree said:

simonr91 said:

Blows my mind that this is legal and seems like something we should lobby about!

Well do it, but the idea of new customer discounts is pervasive across almost all industries... though it has just been banned from Car and Home insurance.

Banning it however generally creates a mid point pricing and so those that are financially astute and switch providers regularly end up paying more (some of which will be vulnerable customers) and those that stay with the same provider for decades are generally slight better off (many of which are older customers who may also be vulnerable) 

Some of the latter customers will be people with MH conditions that make using the telephone a difficult or impossible proposition, so are actively discriminated against by organizations that offer lower prices to people that can.

I have changed my internet provider 3 times, never once phoned the current supplier to cancel or haggle, the new supplier does it all.  Also never contacted new supplier by phone either.

brewerdave

Sandtree said:

simonr91 said:

Blows my mind that this is legal and seems like something we should lobby about!

Well do it, but the idea of new customer discounts is pervasive across almost all industries... though it has just been banned from Car and Home insurance.

My personal experience with recent car and home renewals is that this is currently not true (and unenforceable anyway!)

molerat

It is legal because it is written into the contract.

but

It is absolutely appalling that the useless regulator allows mid fixed term contract price rises.

I don't see any of the other regulatory bodies allowing it.

Obviously OFCOM is in the pocket of the telcos.

HaroldWren5

simonr91 said:

I know this happens every year and it's usually the telco providers that are the worst culprits for this.

However, if their reasoning is:
"|Price rises are never popular, but are sometimes a necessary part of business, if we’re to keep up with the rising costs we face and ensure we can continue to deliver a brilliant network experience as customers’ usage of data grows month on month.|"

Then how come a new customer is paying less?

Example:
If you signed up to BT Full Fibre 900 in 2021, you'd have contracted at £59.99 a month. The CPI increase +3.9% brings you now to £65.56, but if you sign up today it's £55.99.

Blows my mind that this is legal and seems like something we should lobby about!

Exactly. Imagine the BT customers on the same product who were started off on around £80 a month for the same BT Full Fibre 900 service a little earlier on 24 month contracts. They'd have been whacked with a CPI increase for year 1 and year 2 taking it just shy of £100 for the same service a new customer is offered for £59 today. 

It is indeed appalling as molerat mentioned above that the Regulator has okayed this type of practice. One would have thought in general that businesses who enter into contracts with each other build in their forecast costs and set a price when they offer a service. And it works two ways. Everyone tries to exchange services having factored in their costs. 

Imagine if it was the other way round and a clause said this:

"Customers paying you less is never popular, but sometimes are a necessary part of life. If we're to keep up with rising costs and investing in our own life whilst ensuring we can continue to be a continuing brilliant customer, we'll be paying you the monthly price subject to changes once a year, or at our discretion. The price paid per month will be reduced by the official CPI minus a further 3.9% every March, or April. The payment breakdown will be incomprehensible so that you won't be able to tell what we have paid or what the hell is going on. Thank you for your service."