Citizens Advice responds to Ofcom review of inflation-linked telecoms price rises
Matthew Upton, Director of Policy at Citizens Advice, said:
“Ofcom is right to shine a light on this practice, but consumers need rapid action before inflation-busting price hikes kick in this April.
“As we all pull together in a cost-of-living crisis, companies should do everything in their power to help consumers. That means making pricing crystal clear. Worryingly, we found one in three people currently on contracts with rises linked to Consumer Price Inflation (CPI) have never heard of it.
“What consumers really need is for Ofcom and the government to ban mid-contract price rises.”
Customers with both mobile and broadband contracts that include a price-rise clause will see their combined bills increase by an average of £90 a year.
Mobile and broadband customers nationwide are facing an estimated total £2.2 billion in increased costs as a result of mid-contract price rises this year.
Citizens Advice is also concerned about the practice of including technical terms like CPI in mobile and broadband contracts when they are not widely understood by consumers. The charity found one in three people currently on contracts with rises linked to CPI each year “have never heard of CPI”.
Notes to editors
- Opinium carried out a nationally representative survey of 3087 UK adults between 15 and 23 June 2022, of which 2642 had a mobile contract and 2258 had a broadband contract at the time of the survey.
- Customers with price-rise contracts for both mobile and broadband face an average of £90 per year increase. Citizens Advice calculated the average expected price increase across all providers for next year. Where providers have discretion on price rises, the percentage rise they put in place in 2022 was used; where contracts set out how the rise will be calculated, this approach was followed using CPI/RPI figures released in January. These increases were then weighted according to market share (from Opinium polling) to give a market average. This was then multiplied by the average monthly mobile and broadband costs (also from Opinium polling); then multiplied to get the expected yearly increase in price.
- The total cost to consumers of these rises could be around £2.2 billion in 2023. Citizens Advice calculated the number of adults facing price rises for mobile contracts (33 million people) and the number of households facing price rises for broadband (20.4 million households). The charity used population data from the Annual Population Survey estimates via Nomis, and internet access data from Office for National Statistics respectively (household data was used for broadband, rather than individual customers). The charity then multiplied each of these figures by the average expected price increases in mobile and broadband contracts this year (calculated as per footnote 2). This total is a slightly lower figure than the one included in our September 2022 briefing on mid-contract price rises (£2.5 billion), due to inflation figures released last month being slightly lower than the rates that were predicted by Bank of England in August 2022.
- Yonder Data Solutions carried out a nationally representative survey of 2082 UK adults between the 25th-26th January 2023, of which 93% had a mobile contract and 95% had a broadband contract at the time of the survey.The polling showed a third of people currently on contracts with price rises linked to CPI each year “have never heard of CPI”.
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