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Your view: O2’s mid-contract price hike

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O2 and Fixed Means Fixed
Profile photo of Patrick Steen Patrick Steen Conversation Editor
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O2 is increasing prices for new and existing customers alike. An RPI price rise of 2.7% on pay-monthly contracts will hit customers in March 2014. Here’s a round-up of O2 customers’ views on the hike.

David can’t understand the logic for O2’s latest price rise:

‘I cannot fathom how a company can think this behaviour is appropriate. How can it be possible to decide unilaterally to raise the rate on a fixed price deal? This was my first contract phone; it’ll likely be my last with O2.’

David isn’t the only customer pledging to leave O2. Eric is also turning his back on them:

‘I am an O2 customer with two monthly contracts. They may make £6 with the 2.7% rise, but instead of staying loyal, I’m off. They can shove their £76-ish contracts where the sun don’t shine. Their loss in the long run, and every O2 customer should do likewise and write to the CEO.’

Mandy isn’t buying O2’s reasons for hiking prices:

‘What’s worse is that part of the explanation on their website talks about their costs relating to expanding their 4G network when I’m on a contract on a phone that doesn’t even work on 4G so I’m not exactly sure why I should be pleased that this is how they’re investing my money!’

Peter’s whole family has said goodbye to O2:

‘Unbelievable arrogance of big business. “We are upping your charges. Just because we can. No you can’t leave. Not without a large penalty.” My family will never go with O2 again, and I’ll be advising colleagues and friends to do same.’

And Grant has decided to pay off his whole contract to be rid of the company:

‘I’ve just got the same text, called them, paid £231 to pay my contract up and they can loose a customer as there so intent on making an extra 99p they can loose £40 per month…they don’t care about their customers from the attitude of the advisor I spoke to!’

Finally, Mike gets our Comment of the Week for explaining why fixed should mean fixed:

‘People try to budget by taking out contracts, and so should mobile companies in setting their prices of the term of a contract. If they need to change their prices once a year then they should stop offering two year contracts.’

If you’re unhappy about O2’s price rise for new customers, email O2’s CEO to make him think again. Are you an O2 customer? What do you think of the mobile company’s latest mid-contract price rise?

Comments
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Andrew says:
31 January 2014

I don’t actually have a problem with prices going up, when it is justified, and I don’t mind if they adjust prices annually. But when I’ve only been with the toads of O2 for six weeks, I don’t expect them to up their costs by an arbitrary figure that relates to the change in a basket of consumer goods over the previous year.

That for me is the problem. I didn’t believe that my price was fixed (you usually have to pay extra for that in any other market, say energy or mortgages), but I had foolishly assumed that the price rises would be for changes during the term of my contract, in which case I’d expect a single RPI change at the mid point of a two year contract.

So what I’m going to do is formally complain to O2, ask them to rescind the price increases because this is a new contract, and RPI has barely changed since it was taken out. I know they’ll refuse, but I shall then ask for a deadlock letter, and eventually refer it to the Communications Ombusdman. The reason for doing this is not because I expect to get much joy, but because if they won’t issue a deadlock letter I can complaint to OFCOM that O2 are breaching the conditions of their licence (this is a very serious matter), and if they do, then a referral to the Ombudsman costs them money. If they pay by referred case then this will be several hundred pounds, and it will cost O2 about £100 in staff time defending the complaint.

I’d encourage all unhappy (newish) customers to do likewise. Older customers may be on a hiding to nothing unless they can prove that the contract was described as fixed price, but there may be opportunity to complain about things like overseas calls and MMS costs, where they’ve put the costs up by far more than RPI.

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Tates says:
2 February 2014

I am following the same approach. My two year O2 contract is less than 6 weeks old. So they should have known about the increase and should have informed me before I signed the contract. It will be interesting to see what will happen when eventually it gets to OFCOM. For me any increase in the first year is abusive to consumers.

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Maurice M says:
31 January 2014

I have emailed o2 as follows

Dear Mr Lawton, General Manger – Business

I received a letter on 29/01/2014 telling me that you intend to increase the mobile phone charges in March 2014.

I signed up to a fixed term contract, which you are now trying to change. After researching the legality of this action, I would like to make the following points

1. Ofcom regulations clearly state that the only price rises allowed on a fixed term contract are those relating to tax rises. I refer you to http://media.ofcom.org.uk/2013/10/23/protection-for-consumers-against-mid-contract-price-rises/ Therefore a rise in line with the retail price index (as quoted in your letter) should not occur .

2. The only customers that you can enforce price increases on according to the “Which” report, are new customer who joined o2 after the implementation of Ofcom regulations, on the 23/01/2014 providing that the sales representative made it clear that a price increase could be implemented during the length of the fixed term. (please see link below.) I am clearly not a new customer. When I telephoned to question the price rise your representative was unable to read out any relevant part of the terms and conditions relating to the price rise. I repeatedly asked to speak to a supervisor or manager who could explain why your company is not complying with the Ofcom regulation to set out clear terms and conditions with regard to price increases within a fixed term contract. I was repeatedly told that this is company policy and I could speak to nobody else.

http://view.mail.which.co.uk/?j=fec917747562037f&m=fe9e137075650c7c75&ls=fe2c15727c660c75741474&l=ff5b127772&s=fe7017717561007d7415&jb=ff9d1571&ju=fe56157174630c7a7d1c&utm_medium=Email&utm_source=ExactTarget&utm_campaign=fixed_means_fixed_23012014&r=0

Below is a direct quote from the Ofcom regulations, as mentioned in my first point above.

This Guidance sets out that:
• Ofcom is likely to regard any increase3 to the recurring monthly subscription charge4 in a fixed-term contract as ‘materially detrimental’ to consumers;
• providers should therefore give consumers at least 30 days’ notice of any such price rise and allow them to exit their contract without penalty; and
• any changes to contract terms, pricing or otherwise, must be communicated clearly and transparently to consumers.
In accordance with the three bullet points above I have the right to exit my current contract without penalty.

I look forward to hearing from you shortly so that this matter can be resolved.

Maurice M

and have received an automated reply saying there will reply within days ?

Thanks for your email. We’ll look into things and get back to you as soon as we can. At the moment, that should be within 7 working days.

If you’d rather talk to us sooner, our Complaints Support Team are ready to web chat to you.

Just click the button below to start.

Description: Description: Description: Description: Description: cid:image001.jpg@01CD5455.4ADF3D70

They’re available every day, 8.30am till 10pm.

You can see all the details of our complaints process at http://www.o2.co.uk/complaints.

My contract has 2 months to run guess I won’t be returning to o2

I’m a self employed heating engineer and I can just hear myself trying to explain to my customers that the price I quoted was in fact not a true price and had a hidden clause in the terms and conditions that allows me to increase the QUOTED price by RPI at the time of installation. I wonder how long I would be in business

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Maurice M says:
4 February 2014

I got my reply today as follows

Thanks for your email.

I’m sorry you’re unhappy with the announcement about our price change. This is in line with the Retail Price Index (RPI) inflation rate that was announced on 14 January 2014.

As we said in the announcement, we want to give customers the best possible service, for the best possible value. With the current Retail Price Index (RPI) rate of inflation at 2.7%, the cost of everything is going up. As a result, we’re adjusting the price of Pay Monthly Tariffs in line with RPI.

We’re completely modernising our entire network and investing £1.5m every day on replacing and upgrading equipment to ensure our 2G and 3G networks continue to deliver the best experience for our customers. In just 5 months our 4G network is live in 13 cities and over 120 surrounding towns giving access to over 18 million people in the UK, that’s 30% of the UK population. In the last year, we’ve also launched O2 Refresh and we continue to offer extras such as O2 Priority Moments, O2 Gurus, O2 Wifi and O2 Recycle.

A price rise is never welcome but it is covered in your Pay Monthly Mobile Agreement, which comply with applicable law and regulation. Ofcom’s recent “fixed means fixed” guidance applies only to new contracts made after 23rd January 2014 and the terms and conditions you agreed to when you signed up stated that we are entitled to increase your monthly subscription charge by no more than RPI and no more often than every 12 months. These terms are compliant with the body of general consumer protection law. Our advertising has also said ‘tariff prices may go up’ since January 2013.

An increase of this kind does not entitle you to end your airtime agreement mid-contract without paying the remaining months of your subscription. You’ll see the price increase from your March 2014 bill. There’s more information about this on our website: http://www.o2.co.uk/prices.

We trust this provides you with an adequate explanation our decision.

Kind regards

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Maurice M says:
6 February 2014

Complaint Review Service
A few points that you have failed to grasp
I have been a customer since March 2010 I renewed my contract in March 2012 so your reply stating “Our advertising has also said ‘tariff prices may go up’ since January 2013.” Is irrelevant
Do you think for one minute I’m in the slightest bit interested in your future plans to improve this service?
We’re completely modernising our entire network and investing £1.5m every day on replacing and upgrading equipment to ensure our 2G and 3G networks continue to deliver the best experience for our customers. In just 5 months our 4G network is live in 13 cities and over 120 surrounding towns giving access to over 18 million people in the UK, that’s 30% of the UK population. In the last year, we’ve also launched O2 Refresh and we continue to offer extras such as O2 Priority Moments, O2 Gurus, O2 Wifi and O2 Recycle.
If your company can not put enough monies aside for future upgrades or improvements from the profits you are already making you really need to speak to your R+D department about planning.
Ofcom regulations came into force on the 24th January as far as I can see those regulations do not give you the right to change any part of our contract in fact the regulation are designed to do the exact opposite
I again quote
This Guidance sets out that:
• Ofcom is likely to regard any increase3 to the recurring monthly subscription charge4 in a fixed-term contract as ‘materially detrimental’ to consumers;
• providers should therefore give consumers at least 30 days’ notice of any such price rise and allow them to exit their contract without penalty; and
• any changes to contract terms, pricing or otherwise, must be communicated clearly and transparently to consumers.
In accordance with the three bullet points above I have the right to exit my current contract without penalty.

I look forward to hearing from you shortly so that this matter can be resolved.

Maurice M

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Maurice M says:
6 February 2014

they replied the next day with Hi Maurice
We’re sorry you remain unhappy. Price increases are never welcome but inflation has an impact on our costs. We will continue to invest in the network and the services that matter to our customers. We hope we’ve clearly explained the reasons for this decision.
As your contracted started before the 23 January 2014, it allows us to apply a yearly price rise by no more than RPI. This part of the contract, stating that prices can increase, was set out both in your contract and in your summary terms.
This is our final position on the matter. Unfortunately, your complaint about the price rise does not fall within the independent Ombudsman’s remit. But if you have any other concerns that you feel we have not been able to resolve for you, or you wish to clarify the Ombudsman’s position, you can contact them on the details below for further advice:

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Maurice M says:
6 February 2014

My reply to them

Once again you have failed to address my concerns

I have been a customer since March 2010 I renewed my contract in March 2012 so your reply stating “Our advertising has also said “tariff prices may go up’ since January 2013.” Is irrelevant

“As your contracted started before the 23 January 2014, it allows us to apply a yearly price rise by no more than RPI. This part of the contract, stating that prices can increase, was set out both in your contract and in your summary terms.”

Can you supply me with a copy of the contract that I agreed to in March 2012 in particular the clause that states you have the right to increase prices by RPI.

Can you also supply me with the OFCOM regulation that states you have the right to increase a fixed terms contract by any amount other than those increases which are caused by increases in tax.

As the this increase falls after the date that the OFCOM regulations came in to force I have the right to expect o2 Telefónica UK Limited to comply with the regulations.

It appears that the company you represent has no intentions of complying with OFCOM regulations!

So you leave me with no alterative but to ask you to supply my PAC on the 10th of March 2014 as I will be leaving o2 never to return on the 10th April 2014 (at the end of my contract).

Maurice M

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