Mid contract price increase confusion

tallac

I always thought this was silly as I felt companies could have a reasonable guess as to how many increases there'll be for a given customers contract and then spread that across the contract period so it was one flat monthly fee. One could argue that the CPI + some extra % isn't easy to work out but I'm sure there's smart people to have a good guess. Some guesses might be under, some might be over, it'll probably all come out a wash in the end anyway.

Now I hear that OFCOM have banned mid contract price increases related to inflation and must instead be listed in actually monetary value increases. This will become mandatory from 1 Jan 2025. So the companies are now being forced to make this calculation anyway. So why on earth do they even need to increase the price mid-contract. Take the increases they'd like to do, spread that across the contract period as one flat fixed monthly fee that doesn't change during the minimum contract period. Customer will be super happy.

Broadband company is then free to bump the price to whatever they want at the end of the minimum contract period but equally the customer is also free to leave the broadband company if they wish.

I absolutely cannot see any jusitified reason for mid-contract price increases. It's a complete scam as it just sucks in customers to sign up for a low advertised figure which then increases mid-contract.

Yes for me and other people, we can calculate the total cost of the contract by adding up the cost of each month including the price increases. However, so much extra work and confusion on the customer end.

Neil_Jones

Its actually from January 17 2025 and only applies to new contracts after that date:

https://www.ofcom.org.uk/phones-and-broadband/bills-and-charges/ofcom-bans-mid-contract-price-rises-linked-to-inflation/

tallac said:

I absolutely cannot see any jusitified reason for mid-contract price increases. It's a complete scam as it just sucks in customers to sign up for a low advertised figure which then increases mid-contract.

Just playing catch-up to the mobile phone providers where this has been a thing for many years.  And its not a "scam", it tells you in small print at the start of the offer prices will increase every April by CPI+3.9%/£3 a month.  If you choose not to read that then that's your bad.

But that doesn't make it a "scam" by any stretch of the imagination.  There are providers that will give you two years at a fixed rate.  But you'll almost certainly pay more from the outset.  The gamble is whether your automatic (but cheaper to start with) rise beats the more expensive from the off.  If it never does, you're a winner.

tallac

Okay, scam is not the right word. Perhaps unnecessarily complicated for the consumer. Whether it's in the small print, does not mean it shouldn't change. 99% of people never read small print anyway. It's a running joke that dozens of pages of T&Cs that pop up on screen, most people will just accept without reading. Only the most nerdiest of nerds will actually read this.

You're entering a contract that's mosly 12, 18 or 24 months which is not very long. It's not hard for the companies to calculate up front so it's a fixed price to make it easier for customers. And if all companies were forced to do this by Ofcom, then market forces and competition will drive each of the companies to the lowest price possible so it wouldn't necessarily mean you'd be paying more at the outset.

Neil_Jones

tallac said:

Okay, scam is not the right word. Perhaps unnecessarily complicated for the consumer. Whether it's in the small print, does not mean it shouldn't change. 99% of people never read small print anyway. It's a running joke that dozens of pages of T&Cs that pop up on screen, most people will just accept without reading. Only the most nerdiest of nerds will actually read this.

You're entering a contract that's mosly 12, 18 or 24 months which is not very long. It's not hard for the companies to calculate up front so it's a fixed price to make it easier for customers. And if all companies were forced to do this by Ofcom, then market forces and competition will drive each of the companies to the lowest price possible so it wouldn't necessarily mean you'd be paying more at the outset.

That's why it was changed so you could work it out yourself for definite.

If you join up to Hogwarts Internet today for 24 months, the current price is £25 a month and it tells you the price will increase every April by £3 a month when you join, then you can work it out easily:  Five months at £25 = £125, 12 months at £28 = £336, seven months at £31 = £217, add them all together, that's £678 over 24 months, an average of £28.25 over 24 months.

Under the old arrangement the CPI figure used was CPI+3.9%.  Well that wasn't announced until January and was used for the rise three months later, and that's why Ofcom said yeah you're not having that, you need a fixed value. 

You'd have had (assuming CPI was always 4%) and using the same example, you'd have five months at £25 = £125, then 12 months at £26.97 = £323.64, then seven months at £29.10 = £203.70.  £652.34, or an average of £27.18.  Except none of this was set in stone and was ultimately determined by some arbitrary figure that not many people understand or care about so in the period when CPI was like 10% you were looking at like 14% price rises.

There were reasons why Ofcom didn't go for the fixed model you favour and its all documented on Ofcom's website.  Whether you agree with it and what you think should have happened is interesting and you're entitled to your opinion but we are where we are.

Jon_01

There's a pop up EE stand in our local shopping centre.  The guys there are 'creatively' selling BB contracts.

Questions: What about the £3 price rise every March?

EE guy:  'That is put badly on the EE website. It's a max of £3, it could only be £1.10 or 60p... And, it only goes up once in the 24 months...

Both blatantly wrong.

I'm an exEE employee, I called them and told what was happening. They said they'll pass it to the area manager to put a stop to it.

A week later, same guys selling the same way.

Just hope they're ready for the flood of complaints that'll be incoming in a while when people get to March this year and next. . .