New broadband rules could save you money - but here is what to watch out for
Over the last few years, the team at Mirror Money has been campaigning hard for your rights. So it’s fantastic when I get to bring you some news of a victory!
The telecommunications watchdog Ofcom has just announced proposals to clamp down on broadband and mobile phone companies overcharging people for mid-term contract price hikes. Sounds a bit dull? Trust me, it will save you a packet. Here’s how it works – and what you need to watch out for.
Why does my mobile or broadband contract increase each year?
When you sign up to a new mobile phone or broadband contract, you tend to get a better deal if you commit for 18 months or two years. But there’s a catch…
Most telecommunications firms reserve the right to raise the price of your contract in April each year. And these price hikes can be a major deal. That’s because the UK’s main telecoms service providers use this contract clause to hit us with inflation-busting price increases.
This practice has always been controversial, but in recent years the problem has become more pronounced as inflation has rocketed. Most phone and broadband companies take the rate of inflation and stick and extra 4% on the top of it. That meant prices rose by between 14% to 17% last year – far higher than price rises in other sectors.
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Telecommunications firms argue that these price rises reflect the costs of maintaining and improving their networks, but the regulator has been investigating whether this way of calculating price increases is fair and appropriate. And they’ve decided it isn’t.
What do the new rules say?
Ofcom has proposed banning inflation-linked mid-contract price rises from next year. That doesn’t mean all price rises are banned, sadly! But businesses will no longer be able to charge you more for your contract using inflation rates.
The regulator is proposing that we will all be told "in pounds and pence" about future price rises, in advance. That’s because they found that 11 million broadband customers and over half of mobile customers (a whopping 36 million) were on contracts that meant the business could charge inflation-linked price rises. Worryingly, Ofcom estimates that the percentage of people on these contracts will increase, to around six in ten of both broadband and mobile customers.
In many cases, when you are on a contract that allows for inflation-linked price rises mid-contract, you can’t get out of the deal without paying hefty exit fee. These fees can be ludicrously high. Sadly, they aren’t being banned for now, but there are ways you can argue that they should not apply (more on this later).
However, there are a few broadband providers that have contracts that say they must give you notice and the option of bailing on the contract before the rise is applied without exit fees. Make sure you check with your mobile or broadband provider before signing up as these deals are much better for people who might not be able to afford price increases in the future.
Before you all rush to sign up to new deals, a word of warning. Ofgem must consult on these proposals before introducing them. That consultation ends in February, which means that the changes will be agreed in late Spring and introduced around Autumn 2024.
So realistically, you won’t see the proposed changes until the contract renewals in April 2025. And that’s only for new contracts, not ones that are currently running. So make sure you ask questions about leaving your contract early from your broadband or mobile phone provider before signing up.
What about contracts that aren’t delivering now?
Even though the new rules won’t kick in for a bit, you could still potentially get out of a contract if the business isn’t meeting its side of the deal. As I often say in this column, contracts work both ways and if you aren’t getting what you paid for, ask to leave without a fee.
If the business has changed key contract terms and conditions, withdrawn services that you regularly use or introduced any other changes to your existing deal, you can ask to leave and have the exit fees dropped. If they say no (and some telecoms departments have notoriously poor customer service, so don’t be disheartened), make a complaint asking why the contract has changed for the worse. You can go to the free Communications Ombudsman if you’re unhappy.
If your broadband speed or mobile phone reception is poor, then tell the firm, take regular signal tests using one of the many free apps online. That way you can demonstrate that there’s a problem the firm should let you go without charging you. If the business is not providing the average speeds or reception, it promised you, it’s possible to break the contract early.
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What else has been announced?
The regulator also revealed that the number of people on ‘social tariffs’ has increased to 380,000 in September 2023, up from 147,000 a year earlier. Social tariffs are designed to provide cheaper broadband services for people on certain benefits.
These deals can dramatically reduce your broadband costs. Prices range from around £10 to £20 a month if you need faster broadband speeds for work or keeping in touch with your family and friends.
It is disappointing though that millions of people are missing out on these tariffs. According to Ofcom, just over half (55%) of people who qualify for social tariffs don't know about them. That means just 8.3% of all eligible households are actually benefiting from these deals. So if you’re seeing friends or family this Christmas, spread the word.
To get started, contact your broadband provider and ask them about the social tariff deals they offer. You should be able to leave your existing deal mid-contract without having to pay an exit fee. In addition, set up costs should be minimal, there will be no mid-contract price rise and you should be able to leave without a fee too. I would like to see broadband providers doing much more to promote these deals, as it’s ridiculously hard to find some of them on broadband websites.
Communications Ombudsman
Don’t forget that you can make a complaint about most mobile phone or broadband problems to the Ombudsman. There are two services confusingly and your service provider will tell you which one they are signed up to.
Ombudsman services are free and work as free and accessible alternatives to the court, with the ombudsman’s decision ultimately being binding on the firm (but not you). The largest of the services is the Communications Ombudsman and you can contact them here. Alternatively you can find CISAS here.
- Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist
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