Business

The UK communications regulator has launched an investigation into broadband and phone bill price rises as research suggested many customers are unaware providers can increase costs.

The review, to be carried out by Ofcom (the Office of Communications), will focus on mid-contract price increases as the watchdog said it was worried about uncertainty faced by customers over rises, and wished to understand how much customers know about what they’re signing up to.

Ofcom expressed concern about the “degree of uncertainty consumers face about future price rises specified in contracts”.

Bills have been legally upped by providers as inflation has remained in double digits and a number of telecoms firms introduced in-contract rises in 2021.

Prices are usually increased in line with the retail price index (RPI) measure of inflation which stood at a 40-year high of 13.4% in December.

As a result, millions of consumers are to be hit with monthly increases of about 14% in April.

But a survey of 3,499 people, carried out by Ofcom, found about a third of mobile and broadband customers don’t know whether their provider can increase their bill.

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Around half of those customers did not know how the price increase would be calculated and nearly half of those surveyed did not know what inflation measurements were.

The need for tougher consumer protections is being examined as part of the review.

“We need to take a closer look at these issues to consider whether we need to intervene to ensure customers have greater certainty and clarity, from the outset, about the prices they will pay over the duration of their contract,” Ofcom said.

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Companies can legally increase prices during contract periods but some choose not to do so. Some give customers 30 days’ notice of hikes and the right to exit a contract with penalties. Others providers specify price rises in the contract from the start.

Providers are subject to strict rules, however, and must make potential price rises clear before consumers sign up to a contract.

Inflation-linked hikes can be “unclear and unpredictable”, Ofcom said.

“Customers need certainty and clarity about what they will pay over the course of their contract… So we’re concerned that providers are making it difficult for customers to know what to expect.”

Review findings will be published later this year.

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