/ Technology

Mobile customers are still baffled by RPI price rises

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Even if you managed to find the clause buried in your ‘fixed’ mobile phone contract that says your provider can hike prices by the rate of RPI, would you know what that means?

Ahead of the results of Ofcom’s consultation on fixed mobile phone contracts, our latest research has found that most mobile customers don’t know the rate their so-called ‘fixed’ mobile contract can increase by.

What’s RPI when it’s at home?

‘Fixed’ mobile phone contracts allow providers to hike prices as long as this isn’t higher than the rate of inflation. This is a contradiction we’ve been working to put right with our Fixed Means Fixed campaign following price rises from Vodafone, Three, Orange, T-Mobile, O2 and others. The price and all other aspects of mobile phone deals should remain the same for the minimum term of the contract.

And we now have more evidence that something must be done. Our latest research found that nearly half of us don’t know what RPI (the Retail Prices Index) actually means, and eight in 10 don’t know what the current rate of RPI is. Yet, RPI is what mobile phone providers base their price rises on. Ultimately, millions of mobile customers are being caught out by unfair price rises due to clauses and technical terms buried in the small print of contracts.

For the record, RPI is based on the cost of a theoretical basket of everyday goods and services, and it’s currently at 3.1%. I’d forgive you for not knowing what it was, or indeed what its precise level is!

Ofcom must do right by mobile customers

We launched our Fixed Means Fixed campaign last year in response to thousands of your comments here on Which? Conversation. Mobile customers from all the major providers were not happy with price rises on their ‘fixed’ contracts, and so we submitted a formal complaint to Ofcom. The regulator soon published a consultation containing four potential options – 1 . do nothing, 2. force companies to be clearer in their marketing, 3. let us opt in to ‘variable priced’ contracts or 4. allow customers to exit contracts penalty-free if prices are hiked.

Ofcom expressed a preference for option 4 and so did you when we put it to the vote. Needless to say, we don’t think much of options 1, 2 and 3, and so we’re urging Ofcom to stand firm in the face of heavy lobbying from mobile providers.

Our research clearly shows that even if companies were true to their word and were more transparent in their marketing (our mystery shopping exercise suggests that’s no certainty), there’s still a danger that most people wouldn’t know what an ‘RPI price rise’ meant. This makes it all the more important that Ofcom ensures you can escape unfair price rises on fixed mobile contracts without fear of a penalty.

Ofcom’s aiming to publish its final decision in September and we hope it will listen to the more than 46,000 of you who have supported our Fixed Means Fixed campaign. Ofcom must stick to its guns.

Comments
Member

Very reluctantly, I have moved from PAYG to a contract, because I have to phone some mobile numbers during the day and my landline tariff covers only evening and weekend calls to mobiles.

I have chosen a monthly contract so that I can switch provider whenever I wish. I chose Vodafone, simply because that allowed my to transfer the unused credit on my PAYG account. I took the opportunity to say that I did not want a longer contract because they had raised prices mid-contract in the past and told the person I spoke to about the Fixed Means Fixed campaign.

Member

The RPI shows that the rate at which retail prices are rising is currently falling so mobile phone companies are probably going to bag their price hikes now in order to lock their tariffs onto a higher floor level.

Member
Carol says:
2 September 2013

I have had a mobile contract with T-mobile for 15 months(of 24) and I recently was encouraged to change and upgrade to EE mobile saying I wouldn’t be charged more. it seemed I would get a better mobile service. for the same price. I have unlimited text phone and web use.( photos cost extra.)
I had an extra £2 added on last month, so this seemed good. What I did not realise was I was charged for the full month and then 2 weeks later charged by EE each at £36. Imagine my shock to find I am having another £36 taken on 15th September 🙂 anyone else had this problem.
i am going to phone them. I feel cheated. It was a phone call from EE staff member intially

Member
Carol says:
2 September 2013

Just spoken to EE customer services and after explaining I have been reassured I will be refunded £26.39 within the next 14 days. So I am much happier.

Member

Actually, Josh, the latest RPI figure, published on 13 August, is 3.1% not 3.3%. Get your facts right.

The exact definition of RPI might not be know to anybody but economist and statisticians, but anybody who pays cursory attention to the news should have a rough idea, since this measure of inflation has been around in the UK for many decades and it’s level gets reported in the news every month when the latest figures get released.

I do agree that fixed price should mean fixed price, but attacking these mobile phone contracts on the basis that consumers don’t know the exact definition of RPI, one out of multiple measures of inflation commonly used in the UK, or its exact value, given it changes on a monthly basis, it barking completely up the wrong tree.

Please concentrate on the core of the argument that fixed should mean fixed and that potential price increased (however calculated) should not be hidden in the small print!

Member

You’re quite right Haring, at the time of carrying out the research the rate of RPI was 3.3% but it has since changed, as you say, to 3.1%. Duly updated above with the correct figure.

Member

I notice today that the retail prices index rose to 3.3% in August from 3.1% in July.

Member
maureen says:
31 January 2014

Exactly that, Haring. Fixed contract should mean a fixed contract, not fixed as long as it suits us. Please keep up the pressure.