Crackdown on mobile contract price increases

MOBILE owners will be able to break contracts free of charge if operators hike prices mid-way through a deal under new proposals.

Telecoms regulator Ofcom has lodged plans to put an end to mid-contract price rises, following an outcry over what consumers believed to be fixed deals.

O2, Vodafone, Orange, T-Mobile and Three have all announced price rises of between 2.4 and 4.34 per cent in the last 14 months. Consumer advice group Which? estimates that these price rises are costing consumers around £150m per year.

The measures will also include fixed line and broadband.

Ofcom claimed the proposals would address consumer concerns “that providers are currently able to raise prices, while they themselves have little choice but to accept the increase or pay a penalty to exit the contract”.

However, Vodafone criticised the plans yesterday, warning that they would increase contract prices.

“The regulator’s proposals risk generating significant confusion and potentially increasing the cost of getting a mobile phone contract for millions of people,” a Vodafone UK spokesperson said. “Ofcom itself admits that if its proposals are carried out, they could result in the up-front cost of using a mobile phone actually increasing as operators will have to try and second guess what price increases third parties will attempt to introduce.”

Currently, pay-monthly customers can only cancel contracts for free if price rises cause “material detriment” – an undefined term. Otherwise, they tend to have to pay off the remainder of their contract to cancel it. Ofcom’s proposals follow a review of 1,644 consumer complaints. It will now seek industry input on the proposals before making a decision around June.