When you sign up for a mobile contract you may think the price you agree to will be the price you pay throughout the life on the contract. But that’s not the case as many UK customers are about to find out. Mobile operators can raise the price of your tariff at any time if those rises are tied to something called the Retail Price Index (RPI). The RPI is a measure of inflation published monthly by the Office for National Statistics. Simply put it measures the cost and value of things relative to how the economy is doing. As inflation rises, so usually do the prices of goods.
Due to the latest RPI two mobile operators have announced price hikes for all their customers, coming into effect in March and April. Those mobile operators are O2 and EE and they’ll be rising EVERYONE’S tariffs by 1.1% this month and next. Keep in mind, this isn’t an increased cost only if you renew your contract. This 1.1% price rise will affect all current customers regardless of when they started their contracts.
“This week’s price rises from O2 and EE will be frustrating for their existing, loyal customers,” says Ernest Doku, telecoms expert at uSwitch.com. “Ofcom has taken big steps to protect mobile users from mid-contract price hikes, but opportunities clearly still exist as bill payers continue to be subject to annual increases. Mobile networks do now make it clear when customers sign up that they will increase their prices in line with RPI once a year. In doing so, it is very hard for customers to leave their contract without penalty when this inevitably happens.”
The news may have felt a bit less of a punch in the gut if O2 and EE hadn’t already increased their prices by 2.7% last year. Incidentally T-Mobile also increased their prices by 2.7% last year and Virgin Mobile increased its prices by 2.5% last year, but neither of those companies have announced RPI price hikes this year like O2 and EE have–at least not yet.
A bit annoyed yet? Me too. But following a backlash about mid-contract price hikes in 2013, Ofcom ruled that mobile providers must give customers 30 days notice of any price increases or reduction in minutes or data. This notice allows customers enough time to act–and possibly get out of their contract.
“There are a few things you can do to leave your contract within the minimum term if your operator raises prices,” says Doku. “Take a look at out-of-bundle costs to see how much they’ve risen. If you regularly dial international numbers, for example, and these prices have increased substantially, you may be able to prove that it constitutes a ‘material detriment’ to your experience and make a good case for leaving early.”
He also notes that if you are outside your minimum contract term, then you are entirely within your rights to vote with your feet, and leave without incurring any additional charges and says “Some providers, such as Three and Tesco Mobile, do offer a ‘price promise’ to customers, pledging to charge the same amount for the entire minimum duration of their contract, and offering protection from any mid-contract price hikes.”
Tesco Mobile was the UK’s first network to introduce a Tariff Promise back in 2012. In a statement today Simon Groves, Chief Marketing Officer of Tesco Mobile, said “Continuing the Tariff Promise into its third year demonstrates our on-going commitment to providing a fair and clear service to our customers. We believe there is no reason for these Hidden Hikes to increase prices agreed with customers, even at the standard rate of inflation. We want to reassure our customers of this simple fact: Tesco Mobile guarantees not to increase prices mid-contract”.
Does a 1.1% price hike irk you enough to switch providers? Let us know in the comments.