Ofcom ban inflation-linked price rises with effect from 17 January 2025.

Xenon

Ofcom are a joke 

ididgetwhereiamtoday

If the companies stick to the old fashioned 12 months contracts then there wouldn’t be any need for mid contract price rises. If ofgem banned mid contract rises then all these companies would defer back to 12 month contracts. 

It’s greed. 

iniltous

If companies were limited to 12 month contract and no increase during the term ( that’s 2 restrictions not one ) , the shorter 11 month term would mean the costs the ISP face , that are currently amortised over a 24 month  term ( like supplying the router , the connection costs etc  , ) would be recouped over this  12 month period  ( so puts up the monthly cost ) and if the provider ( that has its own costs increase, fuel , wages , electricity, business rates etc ) can’t put up its prices during the term  , it will simply charge more than is necessary at the start , to compensate so by the end of the term they are still turning a profit.

This was always going to be a case of careful what you wish for, the complaint was ‘I can’t be expected to know what 3.9%+CPI will be in ££’s and pence , because I don’t know what CPI will be in the future ‘ , so that’s changed to your price will go up £3 in April, the fact that it’s probably going to be more than the old formula is irrelevant, all the idiots shouldn’t have moaned  about the old system ,it was pretty obvious what would happen, at least the previous formula was based on a historical fact ( CPI the March before ) now it isn’t .

As I said , the ‘ban increases’ would also be counter productive in the same way ….a company would simply say , ‘we can afford to sell this product at £30 , but we know our costs will increase in the next year , so to be on the safe side we will charge £33 from the start ‘ so instead of paying £30 for 6 months then £33 for 6 months ( because the increase happens to be after 6 months ) , you pay £33 for 12 months , or £18 more .

jak22

The intention might just have been to get them to specify upfront the increase in £s instead of a %ge but all the operators are using it as a chance to up the increase to £3 - which is going to be at least 10% (unless youre overpaying at over £30) when youve gone to the trouble of haggling it down.

If you start a 2 year in Winter or Spring you'll have just a few months at the agreed price and then a year at + 10% and nearly another at another +10%.

So they absolutely should have forced a return to fixed price contracts.

iniltous

You don’t really understand what Ofcoms mission is , it’s to promote competition, if they said , 12 month deals , no in term price increases, then that’s dictating to the market and is anti competitive , not allowing ISPs to differentiate themselves in the market ….its then a small step for Ofcom to say what the price should be , in which case if everyone has the same T&C’s and the same price , why bother with competition, you may as well have one provider and the government ( Ofcom ) sets the price .

As stated , if Ofcom did outlaw in term price increases, the £30 a month deal over 24 months with a baked in £3 increase, ( and for convenience assuming the annual increase is after 12 months ) would become a £33 a month deal over 12 months with no increase in the 12 months , the original £30 then £33 deal averages as £31.50 a month , as against £33 so is cheaper ….you have already been mugged off by complaining about 3.9%+CPI , asking Ofcom to ban  in term increases and requiring only  12 months contracts would be another opportunity to be mugged off again , haven’t you learned you lesson 

WillPS

iniltous said:

You don’t really understand what Ofcoms mission is , it’s to promote competition, if they said , 12 month deals , no in term price increases, then that’s dictating to the market and is anti competitive , not allowing ISPs to differentiate themselves in the market ….its then a small step for Ofcom to say what the price should be , in which case if everyone has the same T&C’s and the same price , why bother with competition, you may as well have one provider and the government ( Ofcom ) sets the price .

As stated , if Ofcom did outlaw in term price increases, the £30 a month deal over 24 months with a baked in £3 increase, ( and for convenience assuming the annual increase is after 12 months ) would become a £33 a month deal over 12 months with no increase in the 12 months , the original £30 then £33 deal averages as £31.50 a month , as against £33 so is cheaper ….you have already been mugged off by complaining about 3.9%+CPI , asking Ofcom to ban  in term increases and requiring only  12 months contracts would be another opportunity to be mugged off again , haven’t you learned you lesson 

I agree that stipulating 12 month contracts might well be anti-competitive, but surely a maximum contract length and a ban on in-contract rises wouldn't be?

bristolleedsfan

WillPS said:

iniltous said:

You don’t really understand what Ofcoms mission is , it’s to promote competition, if they said , 12 month deals , no in term price increases, then that’s dictating to the market and is anti competitive , not allowing ISPs to differentiate themselves in the market ….its then a small step for Ofcom to say what the price should be , in which case if everyone has the same T&C’s and the same price , why bother with competition, you may as well have one provider and the government ( Ofcom ) sets the price .

As stated , if Ofcom did outlaw in term price increases, the £30 a month deal over 24 months with a baked in £3 increase, ( and for convenience assuming the annual increase is after 12 months ) would become a £33 a month deal over 12 months with no increase in the 12 months , the original £30 then £33 deal averages as £31.50 a month , as against £33 so is cheaper ….you have already been mugged off by complaining about 3.9%+CPI , asking Ofcom to ban  in term increases and requiring only  12 months contracts would be another opportunity to be mugged off again , haven’t you learned you lesson 

I agree that stipulating 12 month contracts might well be anti-competitive, but surely a maximum contract length and a ban on in-contract rises wouldn't be?

Talk Talk, BT and maybe others have for sometime offered fixed price contracts with no price increase during 24 month term, BT and maybe others offer 12 month contracts, nobody mentions any of this due to price being more expensive than 24 month contracts with in contract annual price increases.( Referring specifically to providers who offer both 24 month contracts with/without in contract increases)

https://www.talktalk.co.uk/flexible-payment

https://www.bt.com/broadband/twelve-month-deals - Cheapest £38.99 per month -  £41.99 upfront for activation and router delivery.

ALogical1

Yep they've just made is worse for us consumers.

A bit late to this, its another Ofcom farce, they are useless from a consumers point:

So they've 'banned' Inflation +% increases, but not really, they've facilitated persucuting the lower/middling cost services by much greater increases, with many sellers now stating a £3 yearly increases*,  a total failure of intent or need.

Its hillarious to say they've 'Banned' increases, they've just forced a worse situation unless annual inflation gets above 6%, rather than done the moral honourable action - a fixed price contract, just like a loan, a car purchase agreement, and energy supply contract etc etc.

So your on a middling service of say £30 (an ther are cheaper so it is much worse)   £3 on £30  is 10%  !!!  How is this helping consumers?
Sure if you're on a 900Mb service (of which practical use of by consumes is moot)  that might cost you £40 - 60 a month and it your paying through th enose for it at the max rate that still 5%, well above current CPI.
So what were/have Ofcom done, just increased corporate rip off of consumers, and no one it doing anything about it - Come on Martin, get your teeth into this Ofcom farce.

It is incredulous that the 'powers' that be are so inept to see the unsustainable situation of this, if consumers 'income' goes up by cpi, yet these corporation are allowed to charge CPI + %es, they'll become unafforable/disproportinately expensive, based on a cpi of 2% the cost will double against earning at the same cpi) in real terms, good for who, certainly isnt for consumers, 'though is obviously is for the corporations and the government s tax take!  If the cpi is 4% its 'only' a 50% increase against earnings.

Shoddy consumer care.

All the great 'ban' from ofcom has done is 'protection' for the consumer IF CPI is More than 7%, otherwise the consumers are worse and providers proffit at at consumers detriment!!

Another Ofcom consumer rip off, a national disgrace.

Kim_13

WillPS said:

iniltous said:

You don’t really understand what Ofcoms mission is , it’s to promote competition, if they said , 12 month deals , no in term price increases, then that’s dictating to the market and is anti competitive , not allowing ISPs to differentiate themselves in the market ….its then a small step for Ofcom to say what the price should be , in which case if everyone has the same T&C’s and the same price , why bother with competition, you may as well have one provider and the government ( Ofcom ) sets the price .

As stated , if Ofcom did outlaw in term price increases, the £30 a month deal over 24 months with a baked in £3 increase, ( and for convenience assuming the annual increase is after 12 months ) would become a £33 a month deal over 12 months with no increase in the 12 months , the original £30 then £33 deal averages as £31.50 a month , as against £33 so is cheaper ….you have already been mugged off by complaining about 3.9%+CPI , asking Ofcom to ban  in term increases and requiring only  12 months contracts would be another opportunity to be mugged off again , haven’t you learned you lesson 

I agree that stipulating 12 month contracts might well be anti-competitive, but surely a maximum contract length and a ban on in-contract rises wouldn't be?

This.

They would only need to stipulate the latter, then the market would soon return to the old ways of 12 month contracts rather than (usually) 24, because then they can change the price sooner. At least in this case there is flexibility for the consumer, who might only have a one year tenancy and then incur early termination fees because their LL wanted or needed their property back and the broadband/tv supplier couldn’t supply the new address. It’ll be 3 years before long, just as happened with mobiles to make high end smartphones appear cheaper. Only in this case they do it because there is no disadvantage, they get to commit the customer without needing to make any kind of real commitment themselves. With fixed savings, energy and mortgages, sometimes the customer wins and sometimes the company wins. You can also choose to fix or not, while for internet you can’t avoid being in a contract (the out of contract price being at least twice the market rate forces people to lock in rather than continue on their existing inflation linked increases.)

When Ofcom first said that increasing prices mid contract was allowed if the customer was told in advance, companies doing so were the exception. Then more did it until everyone was at it. Companies also make it anti-competitive by deciding that just because something is allowed, they will do it and also do it every year without fail. Any company playing fair would have a tiered increase, but the evidence so far is the new rises will be in the ballpark of 10% a year and penalising basic users while those with top end packages / done nothing for years so the price keeps climbing are the only ones that might actually get a better deal out of the new system.

They could also have said companies must offer a choice of pounds and pence and inflation where increasing prices mid contract - then the customer can go the pounds and pence route if they need price certainty / don’t understand inflation linked increases, without making in-contract rises worse for everyone.

It is beyond me that no one stops to think ‘what might be the unintended consequences of this rule/law/system, and what measures can we put in place so that there is a balanced outcome.’

iniltous

Most ISP ‘need’ longer than 12 month contracts to cover the upfront costs that are currently ameliorate over the longer 24 month term , connection and router costs are incorporated into the monthly fee , if this adds £48 to the costs , that’s £2 a month on a 24 month deal , £4 on a 12 month deal …no one is going to voluntarily be £2 a month more expensive , go on any comparison site , they sort by price, no one will trade ‘ 12  months flexibility ‘ for £2 a month , in this industry price is pretty much the only thing regular punters look at .

Obviously if the regulator made it compulsory that only 12 month deals were available, that wouldn’t be an issue , but the regulator doesn’t want standardised offers in the marketplace , if that was wanted , why bother have competitors, you coukd have a single ISP and everyone pays the same you with the regulator setting the price , and that’s not what they want ( or probably what you want ) , they want differentiation in the marketplace.

In this case , although the regulator is useless , it was forums such as this and the media in general that railed against the CPI+% formula for price rises , because of a year or two of larger than normal inflation, and given that this industry operates are a market , and they can’t simply ‘ ban’ price increases, so once they outlawed the CPI formula  ( due to media pressure ) it didn’t take a genius to work out that the replacement ( an increase in ££’s quoted at the start of the deal  ) was going to be worse ….it was always a case of ‘ be careful what you wish for ‘