Ofcom, the UK regulator for communication technologies including the internet, has launched an investigation into mid-contract price rises for broadband.
The inquiry comes after BT, Virgin Media and other major providers announced price rises of 14.4% this spring, ahead of UK inflation.
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What are mid-contract price rises for broadband?
Some broadband suppliers include terms in their contracts allowing for mid-contract price rises for broadband customers. The price increase, theoretically based on the CPI and RPI, happens in the spring and affects customers regardless of whether their initial contract has ended,
Currently, providers who include clauses regarding mid-contract price rises in their contracts must make this clear to all customers before they sign up. Ofcom’s research suggests that this step is insufficient and that more action is needed to make sure consumers are clear on the terms of their contracts.
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Will mid-contract price rises be banned?
Currently, it doesn’t appear that Ofcom plans to ban mid-contract price rises for broadband contracts. Ofcom does not regulate the price of broadband and other products directly, instead working to ensure customers are treated fairly by their suppliers.
Ofcom’s main concern is that too few customers understand how mid-contract price rises work and are therefore being caught off guard. The regulator’s preliminary research indicates that around 1 in 3 customers don’t know whether their provider can raise their price mid-contract. Of those that did know, around half were unsure how the price rise would be calculated.
The purpose of the ongoing investigation is to look closely at these issues to see if and how Ofcom can intervene ‘to ensure customers have greater certainty and clarity’ when it comes to the long-term costs of their contracts. They ‘expect to publish [their] initial findings later in the year,’ at which point we’ll learn more about the intended course of action.
Consumer rights advocate Martin Lewis has spoken out against mid-contract price rises for broadband, stating ‘If I ran Ofcom I’d ban these mid-contract, above-inflation rises. Hopefully soon we’ll see it do the same.’
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Which internet providers don’t raise their prices mid-contract?
There are a growing number of internet suppliers who advertise the fact that they do not raise customer prices for broadband mid-contract. These tend to be smaller, newer networks that prioritise customer service as a way to distinguish themselves from the major suppliers.
Providers who offer fixed-term contracts with no mid-contract price rises for broadband include Hyperoptic and Zen broadband.
What should I do if I’m unhappy about the price rise?
If you are outside your initial contract period, you can leave your current contract without penalty. If you’re happy with your current service other than the price increase, let your supplier know when you go to cancel your contract. Most internet providers have a lot of flexibility when it comes to keeping customers on board, so call to cancel your service and see what discount you are offered to stay. Make sure to have the welcome prices from some competitors to hand, and read our guide on complaining to your broadband provider for more details.
If you are within your initial commitment period, read the terms of your contract carefully. Most will mention that the supplier has the right to raise your prices, but if it’s not mentioned – as is the case for millions of Virgin Media and Sky customers this year – then you can leave your contract penalty-free. Customers only have 30 days from the date they are notified about the price increase to exit without penalty, so reach out to your supplier immediately if you are affected
Otherwise, your options are to accept the price hike or pay an exit fee to leave your contract early. These are usually around 60% of the remaining value of your contract, so unless you’re very unhappy about the price rising you’ll be better off waiting till the end of your contract.
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