Mobile networks using small print to raise prices on fixed tariffs

by Emma Lunn on 17 July 2012  |  12 comments
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Mobile phone networks are cashing in by using the small print in contracts to raise the costs of what should be fixed rate tariffs.

Mobile users might assume that committing to a tariff for a certain period of time will mean the cost of that tariff can’t rise – but they’re wrong.

Consumer group Which? has investigated networks using clauses hidden in the small-print to legally hike prices while customers are in contract. It reckons that the price hikes could be costing consumers up to £90 million a year.

Unsurprisingly it also found that most people (70%) didn’t realise prices could increase during a contract period.

Which? has launched a campaign, Fixed Means Fixed, calling for an end to price increases on fixed mobile phone contracts, arguing they should stay the same price from start to finish of the contract.

The guilty parties

Last week Three became the latest mobile operator to use this tactic when the price hikes announced in May took effect. Three has increased its ‘fixed' prices by 3.6% which will affect more than one million customers, including those with mobile broadband.

On a £30 monthly plan, this represents a £1.08 monthly or £12.96 annual increase. The cost of calls and data outside the plan or on pay-as-you-go will not rise.

Contract small print states that “inflation-linked price rises” are allowed and Three has used this clause and March’s 3.6% rise in the Retail Price Index to up prices.

Under the terms of the contract, the increase means customers cannot leave their contract early if they don’t like it – they just have to lump it.

Orange and T-Mobile

Orange and T-Mobile have both also used contract small print to hike fixed contract prices in the past year.

Orange raised prices by 4.34% in January and T-Mobile by 3.7% in May, respectively.

Vodafone

Last October Vodafone announced it was “simplifying” bills. By “simplifying” it really meant putting prices up.

The network started rounding bills up to the nearest 50p. So customers that normally paid £24.57 or £31.65 a month would pay £25 and £32 respectively.

Although Vodafone promised that no one would pay more than an extra 49p each month or £5.88 a year, the price hikes didn’t go down well. And you can see why: Vodafone has about 19 million customers in the UK and if each paid an extra £5.88 a year it adds up to an extra £55.8m for Vodafone.

Complaints

While complaining to networks about in-contract price hikes has proved fruitless so far, Which? has submitted a formal complaint to Ofcom, asking the regulator to urgently investigate this issue and rule that ‘fixed means fixed'.

Which? says it wants the price and all other aspects of fixed deals to remain the same for the contract period when consumers are also tied-in. If there is a chance that prices may rise, operators must be more upfront about this in their advertising and allow people to switch providers without penalty.

Shopping around

Whether you’re affected by in-contract price hikes or not, it’s a good idea to shop around when your existing mobile contract comes to an end. New deals are coming on to the market all the time and generally offer inclusive minutes, texts and data/internet as well as the latest smartphone in many cases.

Take half an hour to go through your old mobile bills and work out how much you are actually using your phone each month and for what.

You’ll be able to save money if you opt for a SIM-only deal and continue to use your existing handset. Back in April I wrote about how switching to a SIM-only deal saved me £234 on my annual bill.

Check out lovemoney.com's new mobile phone and tariff comparison centre to search the market for the best deal for you.

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