/ Technology

Mobile phone price rises: should Ofcom stick to its guns?

Fixed Means Fixed supporters cartoon

A lot has happened since we launched our Fixed Means Fixed campaign. Our formal complaint led to Ofcom launching a consultation on price rises during fixed contracts – and your views were integral to our response.

Ofcom’s consultation into price rises in the middle of fixed contracts closed last week. We’ve handed in our response and we await the outcome with baited breath.

What’s important in this is the role you’ve all played. The thousands of comments made here on Which? Conversation formed a key part of our response to Ofcom’s consultation. Fixed Means Fixed is a campaign driven by consumers, so here’s to you for helping us tell Ofcom to do the right thing.

There’s only one option that makes sense

Poll results for Ofcom consultationSo, how did we respond? Well, four options were presented in Ofcom’s consultation. Three of them, ranging from doing nothing to greater transparency of price rise terms, didn’t quite fit the bill. For instance, although we want companies to be clear about price rises, that wouldn’t change the fact that customers don’t have a chance to avoid them. Hikes have been imposed by all the major mobile providers (O2, Vodafone, Orange, T-Mobile and Three Mobile) after all.

However, Ofcom’s fourth option – allowing customers to exit contracts without penalty if providers hike prices – hits the mark. We’ve always thought that the price should stay fixed from the day it’s agreed until the end of that agreement. And if providers don’t want to keep their end of the bargain and prices do change, you should be able to legally leave without having to pay an exit penalty.

And you agreed with us. When we put all the options to you in a survey, you were overwhelmingly in favour of option four – 91% of more than 5,000 voters went for it.

Redressing the balance of power

We think option four would give you greater power and freedom to vote with your feet. You could trust the price you signed up to, and if prices do increase you can reject it and switch providers.

Moreover, it could act as an incentive for providers to stick to the advertised price throughout the contract in order to avoid losing their loyal customers to their competitors. All in all, we think that option four would change the balance of power and should lead to an environment where you get what you signed up for.

So, thank you for all your help with our Fixed Means Fixed campaign and for being a key part of our response to Ofcom. We’ll be keeping up the pressure on your behalf while the regulator considers what it does next. But in the meantime we still want to hear from you – do you think Ofcom should stick to its guns and implement option four?

Comments
Member

This is great news but the top priority is for the phone companies to be banned from raising prices during a contract. Nothing less will do.

Member

I absolutely agree, why did Ofcom not offer this option? Are they funded by the very people who they regulate? Do their members have a conflict of interest because of investments or directorships in mobile phone companies? Or are they just scared of the power that these monolithic companies have these days, given that a mobile phone has become a virtual necessity in today’s world? Who knows, with the sleaze and corruption in politics and the media today, anything is possible!!!

I emigrated to Yorkshire 25 years ago and work for myself in the construction industry and have become all to familiar with a business practice I first encountered up here known as the “Fixed price, variable specification” contract (also much loved by that other industry of repute namely Estate Agents).

I guess with globalisation and diversification in business, the mobile phone companies may have learnt this wheeze from business associates in the construction industry :-))

Am I surprised?……….. I think you know the answer to that one :-)))

Member

Yes I voted, but I didn’t really see the option I would have preferred, e.g. A fixed contract should stay fixed for the term ( except for VAT changes). All the options seemed to be about getting out after a rise, which in theory there shouldn’t be.

And could you re list what the actual options were, as I’ve voted I can’t see them anymore.

Member

From the Which? response to the Ofcom consultation (link above):

The four options presented by Ofcom were as follows: 1. Make no changes, 2. Require greater transparency of price variation terms, 3. Consumers have to expressly opt in to price rise contracts and 4. Allow consumers to exit contracts without penalty.

The introduction would be more helpful if this information was included.

Member

Just as a matter of interest would these very one sided contracts fall under the “Unfair Terms and Conditions Regulations 1999”? It would seem that it might be an avenue to explore given that Ofcom is obviously running scared of the companies they regulate.

Come on Which? only you have the clout and resources to pursue a case that way, if it is possible

Member
Anon the mouse says:
3 April 2013

Yes they do. And also good faith in contracts applies too

Member
Keith C says:
2 April 2013

Is it just me or has anyone else been hit for a SECOND increase on the same contract?

I phoned T-mobile who said that the contract allows them to do that as inflation had gone up this year. So we can expect an increase year in year out! I`m sure most of the providers don`t have yearly contracts with their suppliers as they would spend forever re-negotiating – most likely have nice 5 year fixed deals so costs can be predicted well in advance

Member
Steve Hayes says:
2 April 2013

Me too, a retail contract for a term of 1 or 2 years should just be for a fixed price. Come on Which, don’t settle for such a weak getout.

As for the options, actually option 3 is much more to the point; I can only imagine it was beadly explained, because it says that the price is fixed unless you actually accept a price change, which is a better version of option 4