UK comms watchdog banning inflation-linked mid-contract price rises UK communications regulator Ofcom has banned mid-contract price rises linked to inflation. The change, which comes into effect from January 2025, means that price rises must be clearly written into contracts. Ofcom noted that BT and Vodafone had already changed their pricing practices accordingly. Cristina Luna-Esteban, Ofcom …
The obvious, and clearly needed mandate was for suppliers to offer fixed prices when they have a fixed/minimum term. Companies can then offer a fixed price that includes any additional inflation linked costs (like they always used to).
Lord alone knows why Ofcom think it reasonable to have contract terms that say "and this time next year we'll put your contract up by an arbitrary £6 a month, and that's because we can, and is linked to nothing".
Agreed the whole point to signing up for a fixed term contract is to get a better deal that just paying as you go on a monthly basis, but having them tell you it will be £25 pm until April when it could be whatever amount makes you wonder what actual benefit you are getting from being in a contract in the first place?
Just ban all mid term contract rises.
If they were only allowed to advertise the highest price during the contract, or the total contract price, then it would be fine.
It is really just another way they can lie in their advertising, by advertising one price then charging something totally different.
I've ditched long-term contracts altogether for a variety of reasons and now use mobile broadband rather than a fixed line. If you look at the costs of 1 month rolling contracts, they've typically continued to fall (or at least to fall per minute of call time or GB of data) while long-term contracts have continued to rise.
My conclusion is that Ofcom is creating inflation and stifling competition by not only permitting these unwarranted increases, but also by sanctioning contracts as long as 24 months. 12 months seems to me the maximum reasonable period for a consumer telecomms contract.
Incidentally, I observe similar results in other markets with relatively long contractual periods - there's no incentive to compete because consumers have such a narrow window in which to change providers without a significant penalty.
I do hate when Inflation is cited as the cause for an increase in costs. The increase in costs IS the inflation.
Now, sure, the root of inflation is essentially how much and the price of oil one needs to import to operate; but what does that tell you about what actions are needed to keep costs under control...
> the root of inflation is essentially how much and the price of oil one needs to import to operate
Err no, the price of oil has been fluctuating around $100 per barrel for decades, if it were the root of inflation, it would be somewhere over $500 a barrel today….
https://www.macrotrends.net/1369/crude-oil-price-history-chart
Inflation is due to others increasing their prices …
"Finally, broadband and mobile customers will know ahead of time exactly what they will pay for the duration of a contract, making it easier for them to properly manage their finances."
Finally?? Knowing exactly what you would pay was the case for decades, before the utter cnut telco operators decided they could gouge customers for another few quid just after Covid.
It wasn't Covid - that just made the amounts more obvious by driving up the inflation rate.
Mid contract rises came in about 10 years ago when 24 month contracts became the norm.
And those were introduced because handset prices had risen to a level that couldn't be written off over the course of a 12 month contract.
So basically it's Apple's fault. As usual :-P
I suspect much changed when Ofcom permitted the operators to charge an above inflation increase to fund the roll out of 3G, then the universal coverage (on going) , and now the telco’s simply cite any investment bandwagon as a reason to maintain the above inflation increases: 4G, 5G, AI, replacing Huawei kit…
I seem to remember fixed price 2 year contracts was a feature of Orange, so I only saw mid term increases after I converted my Orange contract to an EE contract, a few years after 2012.
Better to leave them to it and let them put up their prices as much as they want and, instead, introduce a gouging-bastards-profiteering tax. When they put the prices up then they have to demonstrate the need for the increase based on operating cost increases and/or investment + reasonable profit. Not C-suite bonuses. Not shareholder dividentds. Not buying their own shares back to trigger bonuses. If they can't demonstrate this then it's classed as greedy-bastard profiteering and it's taxed at 200%.
Which they can do just fine, but it also means that, if they choose to put the prices up, customers can leave them almost immediately. That is why a lot of places that actually do month-to-month contracts don't mess with the prices too often. They know that doing that will cause people to leave and that they often attract their customers with simple and stable prices because their customers are those who shopped around to find them and can shop around again if they don't like them.
This is pure greed. Up until two months ago (when I changed to fibre, different contract), what I was paying for my internet/landline/mobile was a lot (via Orange France) but the price hadn't changed in a decade or so. Instead, every so often I'd get a message saying my offer had increased. I started with 3G and 500MB/month mobile data, and finished with 5G (not that there's any such thing around these parts) and 200GB/month.
All of the "prices will rise by inflation plus X%" (I hear this read out very quickly at the end of radio adverts) is simply because people accept it rather than saying piss off like they should.
My local fibre ISP is fixed price - no silly buggers.
I had kept on VM largely for the cable TV but when this crap came along at the end of my previous and genuinely fixed deal I dumped them. I had the cable service for around 21 years, starting with Blueyonder...
Inflation isn’t under the control of other businesses that offer multi-year fixed payment supply contracts…
This is really about risk reduction (to the operator) and profiteering.
I don’t doubt they will shorten contracts to rolling one month as these carry a price premium and an even lower level of risk. however (I might have missed it) it seems Ofcom has not set a maximum mid contract increase limit, remember currently its inflation plus 3.9 percentage points. So I can see operators getting creative and effectively treating multi year contracts as cash cows…
Aside based on the Tesco mobile ad’s I expect roaming charges to become normal again after 2025.
Inflation is an aggregated metric across the whole economy, not specific services. Most services are supposed to get cheaper because of competition or improved efficiency.
For the same reason "bad deflation" is a myth, because total deflation is a weighted sum of price changes ("flations") for all services and goods. And flations have different reasons:
1st deflation could be due to inequality, when the majority is unable to buy anything.
2nd deflation could be due to overproduction (for example seasonal fruit oversupply) and inability to rapidly consume or repurpose produced goods, or not to consume the goods at all.
3rd flation could be due to central bank interest rate changes, since the changes impact the majority of economic activities through banks. "Price of money", which is really the price of loans.
4th flation could be due to sudden fall of demand for particular service or skill - people are slow to adapt to new labor conditions and re-skill, and are geographically immobile.
5th inflation could be due to sudden disruptions of supply chains, as we witnessed during the COVID. It is opposite to the 2nd deflation, for example.
6th inflation could be due to money printing without increased supply of goods and services. Somebody obviously gets and spends the printed money.
"Bad deflation" could be justified differently:
1st bad deflation is a myth enabling capitalist exploitation, because people will never have enough and will be unable to live off their constantly devaluing savings. The majority must work all the time.
2nd bad deflation implies that functioning economy always has resource misallocations, therefore certain inflation is an indicator of economic activity. Deflation may suggest overall declining economic activity. But measuring economic activity with flation is mixing unrelated terms. Flation is not a good metric for economic activity.
Anecdotal wisdom is that people will never get enough. But it is generally not true for any specific good or service. The model of ever growing economy is likely wrong. Maybe Japan has demonstrated what it possible during recent "stagnation" years. Smart resource allocation and re-allocation is very important, for example by dynamic taxation.
> This is why unemployment and inflation are linked.
High inflation leads to high cost of borrowing, which leads to cost cutting, which leads to layoffs and recruitment freezes, which leads to people not being able to get work and thus be classed as unemployed…
> Isn't what you are saying contrary to monetary policy?
From what I can see monetary policy is based on a load of beliefs that don’t stand up to scrutiny. As practised by the Bank of England, it is purely about hitting a largely arbitrary inflation figure, regardless of casualties…
Remember monetary policy raises interest rates with the explicit intent of causing belts to be tightened and reducing economic activity, in the sure knowledge it will create unemployment. This is the unstated connection between “ High inflation leads to high cost of borrowing,” I’m sure if the BoE had done nothing these last few years inflation would have still come down (as many economists forecasted) and there would have been more “spare” money in circulation to protect jobs…
> Besides it would mean deflation should stimulate employment.
In some ways a level of deflation/negligible inflation does stimulate employment. Although “stimulant” includes jobs being maintained and not necessarily the creation of new jobs (ie. Significant Enlargement of the total number of jobs in the economy).
Apart from the obvious suspicion - which applies to lots of companies / sectors - that they are being greedy bar stewards - why have these always been inflation PLUS a further %.
Telecom costs are a component of the inflation figures that are calculated - so why do the need the PLUS?
Surely we're in danger of getting into a runaway infinite loop if they are allowed to keep charging the PLUS on top.
Actually meh: the problem is that these big 3 UK telcos are de facto colluding on price levels and rises, because there is simply not enough competition.
You only have to look at the trashing of Phones4U in an alleged coordinated way to see "quiet collusion" is the way they work.
Mobile telecoms are a utility and should be price-regulated as such: bare minimum pricing, more competition, easier switching and more pressure to reduce - or at least communicate - lower tariff-prices where a customer could get more data for lower (monthly) charge.
Instead, EE for example makes 1-2 billion in profit every year and they're giving themselves massive payrises at the top of those organisations every year for doing sod-all meaningful at the customer level.
If the limits to price rises are poorly thought out or set, for-profit companies will set their price rises at the limit rather than up-to the limit.
This is why the Telcos set their price rises to CPI+3.9% and universities set their tuition fees to £9250 in England and £9000 in Scotland, Wales and Norther ireland.
These aren't industries that are having their profits severely limited by regulation, they are having the need for competition eliminated by the implied cartel pricing of the regulated price.
I'm not clever enough to work out how to make price regulation work, but what we've got isn't working.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2025
