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Fixed means ‘fixed’ for energy contracts – so why not mobile?

phone electricity gas spelled out in fridge magnets

Beat the energy price rises? I didn’t think it was possible. But Ofgem licence terms mean you can escape from your contract if gas and electricity prices go up. There’s a lesson here for the mobile industry…

Having worked on the Which? Affordable Energy Campaign for well over a year, I could list off the top of my head at least twenty things that are wrong with the energy industry.

But today I want to talk about something it does right.

Escape from energy price rises

We’re reaching the time of year when bill-payers quake in their boots – SSE has announced price rises of 9% for the winter, and people will be worried that their energy company will be the next to go. Eon has announced that its prices will not go up until at least 2013, but that won’t necessarily comfort those who are still waiting for their own company to make an announcement.

But here’s the good news: you, as an energy customer, don’t actually have to accept these price rises. That’s right – you can reject them. There are three possible tariffs that you might be on with your company:

  • Fixed: the simplest one. You sign up to a fixed contract, paying a set price for your energy, for a set period of time. In this case, the price rises won’t affect you.
  • Variable: you’re not locked in. You sign up to pay a certain amount, but accept that there might be price rises. However, as you’re not locked into a contract, you can switch away if the company raises its prices.
  • Fixed variable: the tricky one. These are contracts where the price you pay might be ‘fixed’ at a certain percentage below the ‘standard’ rate. So when the standard rate rises, so does your bill. However, with these deals, even though you may have signed a contract for a set period, the energy company must allow you to leave the contract if they increase their prices.

Say no to energy price rises

Ofgem licence conditions (which all energy companies must comply with) say that if the company increases any of the charges set out in your contract they must give you the right to leave. This includes price rises, late-payment charges, and changes to discounts that you get.

All you need to do is write to your supplier before the price rises take effect (energy companies must give you 30 days notice before the prices go up), make sure your new supplier contacts your old supplier within 15 days, and you won’t have to pay the increased prices or an exit fee.

Fixed Means Fixed – but only for energy

I was surprised when I heard of this rule – we’ve recently been working hard on our Fixed Means Fixed campaign, trying to convince Ofcom to stop mobile companies raising their prices mid-contract, then preventing customers from leaving unless they pay a huge charge.

The excuses we’ve been given by the mobile companies include things like ‘we’re forced to do it – rising costs mean we can’t afford not to raise prices’, which sounds very similar to the reasons energy companies give. It’s out of their hands, costs are rising, and so they have to put up their prices.

I’m not convinced – all companies have costs, and all costs go up from time-to-time. One of the reasons customers tie themselves to a company for 12-24 months is that they think it’s an insurance against these kinds of price rises. By tying customers in, mobile phone companies are benefiting from a guaranteed revenue stream for the length of the contract – it’s only fair that they also bear the risk associated with that guaranteed revenue. Put another way, when their costs go down do they lower prices for consumers on contracts?

I’m pleased that Ofgem has recognised this and made sure that energy companies let their customers leave if their prices go up – but why can’t mobile companies do the same?

Comments
Member

One thing worth considering is that it’s easier for the mobile networks to stick to fixed-mean-fixed because the charge is a fixed monthly amount covering a bundle of usage (minutes, texts, data etc), often with a lot of wasted unused usage in the network’s favour. On the other hand, the electricity and gas suppliers have to bill for a variable amount of usage and they still manage to stick to the agreed price.

It’s a good comparison to make, as it highlights the mobile networks’ bad treatment of their customers.

Member

Err

My pay as you go mobile charge is fixed.

Member

Pay as you go has no strings attached – you can leave without having to pay a hefty penalty. We’re talking about contracts here. And you PAYG isn’t necessarily fixed either, they could change their deal (fewer/more minutes, more/less expensive) – but still that misses the point. If a price goes up on something you agreed to by signing a contract, you should be able to get out of that contract – you can with energy, so why not mobile?

Member

The mobile networks seem to be getting away with changing plain English into doublespeak.
Fixed = not fixed
Unlimited = limited

Member

I just phoned Vodafone about the price rises, and was told that Ofcom had ordered them to raise their prices. I thought there was a loss in translation, so I clarified it 5 times with the operator. Ofcom told them to raise their prices, and had told all mobile operators to do the same. I was staggered.

Unfortunately I cannot find a way to email Ofcom to ask if this is the case, although I am going to try to phone them to ask.

Member
glynne says:
6 October 2012

just had same conversation

Member

I’m surprised so many Vodafone customer service advisers are putting the blame on Ofcom. We shall let Ofcom know. If you’d like to join our debate on the current Vodafone price rise, you can do so here: https://conversation.which.co.uk/technology/vodafone-line-rental-price-rise-mobile-phone-fixed/

Member
glynne says:
6 October 2012

we have a contract with vodaphone an they have sent us an email saying that our contract is increasing by 2.4 %. Are they allowed to do this? I have spoke to voda phone an they say its come from the government through ofcom. I am sure that the rate that we agreed for the contract should stay an they could not incease it. if they do i would say they are breaking the contract can any one give me some correct advice please

Member
Andrew Brown says:
19 October 2012

I am glad my fixed rather mortgage means fixed. Simple fixed means fixed means fixed. Mobile companies change this then customers should be told in advance and be permitted to leave their contract mid term.