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O2’s price rise ‘flies in the face of new rules’

We’ve been celebrating Ofcom’s new rules to protect consumers from mid-contract price rises. But O2 has found an opportunity to sting new customers with another price rise and we’re calling for action.

I will remember Thursday 23 January for two things; a big win for consumers as Ofcom’s rules kicked in, and a big groan as O2 unveiled a price rise.

You see, we came full circle with our Fixed Means Fixed campaign, which had the backing of 60,000 of you. Ofcom’s new rules now mean you can leave your phone or broadband provider penalty-free if it unexpectedly hikes prices mid-contract.

O2 announces a price rise

However, O2 announced a mid-contract price hike of 2.7% for its eight million pay-monthly customers, due to come into effect in March 2014. Unfortunately, the new rules permit price rises for existing customers and new customers as long as these new customers are told about this at the point of sale. Now O2’s using this loophole to hike prices for new customers who signed after 23 January 2014, as O2 says it will warn them that inflation-matching price rises will hit them on a yearly basis.

Plus, since these hikes will be measured by the rate of RPI (retail prices index) you won’t even know how much you’ll end up paying. And those who join O2 after Ofcom’s rules take effect still won’t be able to leave their contracts without penalty.

We don’t think that’s right or that O2 is following the spirit of Ofcom’s original announcement. We stand by the message of our Fixed Means Fixed campaign, and we’ve been in contact with O2 to tell them this. You can also help us up the ante by emailing O2’s chief exec to tell him to rethink O2’s approach.

Three won’t hike prices mid-contract

Thankfully Three Mobile has embraced Ofcom’s new rules:

‘Your fixed monthly recurring fee from Three will not go up in the minimum term of your contract. We support Ofcom’s approach to fixing the price for pay monthly contracts for their duration. We think it’s only fair that customers should have clarity around costs when they sign up to a contract.’

We’ll be keeping a close eye on other providers to make sure they follow Ofcom’s rules, rather than following in the footsteps of O2.

[UPDATE 28/01/2014] Vodafone has confirmed that they will respect Ofcom’s new rules. You can see this in section 11 of Vodafone’s new contract T&Cs:

‘We will respect Ofcom’s guidance on mid-contract price rises. We will continue to notify customers of increases to out-of-bundle call prices a month in advance, with significant variations also potentially allowing a customer to leave their agreement.’

Are you an O2 customer? What do you think of O2’s latest price rise?

Comments
Logical Robbie says:
27 January 2014

Back in early 2013, I challenged o2 (successful) when they increased their price within a month of me taking out a new contract. I only escaped by the skin of my teeth due an old contract given in error by o2 which didn’t have anything about RPI and after a nasty battle, they were forced to concede that they had to let me go.

Ofcoms ruling should have put an end to this practice of misusing RPI to justify increases. I’ve even had one o2 rep tell me it is exactly the same as VAT and that it is out of their control; like VAT, if it goes up, they have to put their prices up but this is not true.

Anyway, maybe this could be used to our advantage.

What would happen if o2 could no longer advertise or sell their ‘Fixed’ contracts as fixed? What if they could only sell contracts as ‘Variable’ ?

Not only do i believe their new terms could be challenged under the ‘Unfair Contract Terms Act (do some research) but I also believe we should all be putting in a complaint to the ASA since these contracts are being sold as ‘fixed’ when clearly, they are not.

In fact, putting aside the price increase thing, since these contracts were and still are being sold as fixed, at least pre 23rd Jan, o2 shouldn’t be able to change the contract within the fixed period and if they do, it would no longer be a fixed contract, QED?

It seems that any half decent lawyer with a reasonable understanding of contract law, should be able to tear these contracts apart with ease but nobody ever challenges Goliath do they?

o2 has now written a contract with terms that directly contradict the point of a ‘Fixed’ contract. How can they be allowed to sell a clearly ‘variable’ contract as fixed when it so clearly is NOT !?

Come on Which, sure you can do something with this fresh angle 😉

Logical Robbie

Questions please – Can I challenge and leave O2 now? Only renewed contract 2 months ago and am not happy about the price increase? Thanks

Anon the Mouse says:
27 January 2014

Monthly costs are going up 2.7%. Which is the RPI amount.

Out of bundle charges are also increasing and for significantly more than the RPI
Phone calls (0870,0800,0845, etc) are going up 14.3%.
MMS messages are also going up 14.3%
Text messages are going up 25%

If you’ve ever made a out of bundle call or sent a picture message then the increase is going to be significantly above RPI for you and of Material Detriment.

I guess I’d better pull out my Orange paperwork to fight for cancellation again

Looks like as fast as the EU attempts to curb roaming prices, O2 are recouping costs from home users.

Good luck cancelling.

Anon the Mouse says:
27 January 2014

37 minutes was all it took. I’m quite disappointed it was over that quick. They barely put up a fight.

Great. It might encourage others to do the same, and maybe tell O2 to have a look at this Conversation. 🙂

Anon the Mouse says:
27 January 2014

It’s really simple, provided you can stand your ground.

Have you ever made a call that isn’t included in your minutes (0870,0845, etc) or sent a picture message that isn’t covered by your bundle? If so then you are getting a 2.7% baserate rise + a further 14.3% rise on those calls and messages.
This is above the 10% material detriment rule that O2 use, and therefore you can cancel without penalty. Remind them of this, and don’t take no for an answer. With the baserate rise it needed to be 7.3% or above.

If you are on O2 refresh then you need to pay off your credit plan as while it is separate from the call plan it is a part of your contract too.

Ofcom General Provision 9.6 does apply due to the material detriment rule.

Anon the Mouse says:
27 January 2014

And I’m out already. Two month old contract cancelled without penalty. I was hoping for more of a fight.

It was more of a fight to stop them outing me when I contacted them…. Now that was something that could do with being highlighted by Which. O2 Don’t change your name on your account when they legally have to.

Peter says:
27 January 2014

re O2 don’t change your name on your account…

Under what circumstances did you want them to change the name on the account, and (as I’ve no idea why you wanted this done) what was it intended to achieve ? Seems a bit unrelated to contract price, but I’m sure you have your reasons…

Anon the Mouse says:
27 January 2014

It’s a tangent sure, but O2 just don’t play nice or stick to the rules if they can get away with it.
Like the yearly price rise stuff recently, the name change was just another example of them doing their own thing and ignoring the law… pretty much business as usual for them.

My name change was a protected characteristic, their system can’t actually change names so they were breaking the law 😉

Peter says:
27 January 2014

Can I suggest a little restraint on the positive view about Three mobile’s comment.

I ask this because on Hot UK Deals there’s been a thread for a few days saying their SIM Only ‘One Plan’ 12 month contract will go from £15 to £20 per month, from the latter half of this week. Obviously it has not yet happened so I am merely passing on rumour, and to be fair to Three, that tariff does allow unlimited data and also for tethering (so you can use your laptop via your mobile phone for the internet, for example), and they’re also going to provide 4G service without having a new level of charges for ‘just 4G’ users.

Also, to be fair to them, it went down from £25 to £15 in July last year, so maybe some heavy data users are part of the cause, but it is quite a rise for anyone who had been considering this and just waiting until their existing contract ended.

Personally I plan to get the £15 deal in the next 48 hours!

Just wanted to butt in here about Three.

I have the Sim only contract at £3 a month (It’s the £6.90 one, but got it for less) for my mobile and Plunet for my landline / broadband. When we get 4G in Leeds later this year I was planning on changing my Three contact and ending Plusnet and just not having a landline anymore.

But this weekend Plusnet has gone down. I phoned Three and managed to get a good deal. They offered me 6,000mins, 5,000 txt’s plus unlimited data for £15. I asked if it had tethering, but it didn’t, he came back with £25 including tethering. But I refused as I didn’t want to spend more than £17.50 (as that is what I pay Plusnet).

He came back once more with £15 for unlimited data including tethering, 6,000 mins & 5,000 txt’s. I didn’t push for the mins or txt’s as I wont use them. It was the data and tethering I needed.

So just goes to show. There really is some good deals out there and stick 2 fingers up at 02.

PedroStephano says:
27 January 2014

I had an interesting convo with @o2 on twitter today when I called them out on the pricerise.
Here’s a transcript

Risky. Might lose customers RT @O2: @_johnoshea We’ve acted within the rules. If RPI fell to a negative we would put prices down accordingly
@PedroStephano Hi there, price increases aren’t welcome but inflation impacts on our costs. The increase will be less than 60p, for most.
@O2 as the Which? article says, I believe you’re acting unfair. Agreed price is agreed price. Stop using small print to ignore please.
@PedroStephano We’re sorry you feel that way. The rise is in line with latest RPI. It’ll help us continue to invest in services/our network.
@O2 if I make a two year agreement with a company, normal English language would mean price same for that two years. Ofcom says so.
@PedroStephano This is referred to in Clause 5 of our terms and conditions. For all the info, visit: o2lin.kr/1iqaZO9
@O2 as I said, you’re using the small print of Ts&Cs to slide in a price rise when customer has agreed for two years. I call it unfair.
@O2 look, I realise you’re “acting within the rules” and all that, but customers like me remember whether we’ve been well looked after >
@PedroStephano We’re sorry to hear that, Pedro. However, inflation does also have an impact on our costs.
@O2 > during our contracts. And when the contract is up for renewal, we consider it all. Thanks for stating your case & letting me likewise

Alan Humphries says:
27 January 2014

Just got text informing me of the rise. Surely this is totally ignoring the new rules

“Surely this is totally ignoring the new rules” well not considering the regulator was probably employing a drunk monkey(s) to draft and write the new rules. And O2 were employing the odd very smart lawyer or three to drive a bus through them.

I still can’t see why the regulator can’t re-issue the rules, so what if they look as dumb as they’ve been proved to be, they have a duty to us the end user and not the phone companies.

B.Lee says:
27 January 2014

Just received info from O2, that they intend to increase my tariff, during the service contract .
This will be my 2nd tariff increase, for this service contract from O2.
When I had received info for the 1st tariff increase, I spoke to O2 customer service, and said how unhappy and disappointed that O2 has taken this step.
Their response is that they can increase the tariff during the service contract, because it is in the small print in the contract.
My response to that was come renewal time is , not to expect my continued support / business.
I was encouraged when OFCOM announced that they would look into tariff increases while in fixed term service contracts.
My service contract expires in April, 2014, so not much longer to stick with O2.
I will then sign on with another phone service provider, who does not not employ this O2 service
practice.
So , with the slogan: YOU KNOW WHAT YOU CAN DO ( I certainly do – STAY AWAY FROM O2 ) &
YOU’RE BETTER CONNECTED ( not really , remember your mobile phone service interruptions and disconnections on several occasions ) WE’RE BETTER DISCONNECTED TO O2.

Michael says:
27 January 2014

So disappointed with O2, completely lost my trust in the company

Janie says:
27 January 2014

Furious about being told my payments are to increase mid contract. How dare they? Contacted them via their websites ‘chat’ facility where we ended up going round in circles. They initially blamed ofcom! I asked if I could leave them mid contract with no penalty fee, surprise surprise they said No. IMO they are just blaming RPI as the reason whereas some fat cat in Telefonica will be getting a HUGE bonus. On twitter O2 told me the increase is ‘only’ 60p. Disgraceful, they are missing the point. It is disgusting they do this without giving the customer a get out clause.

Michael Abrey-Bugg says:
28 January 2014

Like many others I received the rpi price raise amounting to a shade off a £1 per month. I am sure it is allowed in the terms of the contract however was this pointed out at the point of sale No! In financial services this would amount to a key fact and be pointed out. O2 should think about bringing customers with them not taking advantage. I like the EE ads hope the coverage improves soon.

We know that Three will not be putting up prices mid-contract and that O2 intends to, but what about the other networks?

Adam Temperton says:
28 January 2014

When will which admit that
1 You did not win Fixed is Fixed campaign
2 Stop spreading false information.
3 Publish the facts.

All very poor form which

The ofcom Guidance is very clear and O2 Have not Breached any of Ofcoms guidance on this issue

I would like to see a factual piece of advice from Which

“You did not win Fixed is Fixed campaign” – that’s the exact reason I gave for cancelling my Which? subscription

The main problem there was that Which opened the campaign up to the public to vote on how they should proceed, and the overriding winner was a fixed means variable with an option to get out. At that point Which should have renamed their campaign but they didn’t so like every other organisation that misuses the English language, they too are now guilty.

I posted my advertising dictionary (how words are misused in advertising) on another forum page and it was something like this

1. Fixed means variable
2. Unlimited mean limited

I’m sure there were other examples but I forget them now. I cant believe that Trading Standards allow companies to misuse these words just because they have something in their T & C ‘s. But like most regulators I’ve found Trading Standards to be pointless too.

Logical Robbie says:
28 January 2014

How can you breach, guidance? Let’s be straight about this, O2 may not have breached any Ofcom rules but how about the laws with regards to contractual terms? What about the fact that these contracts are being sold as ‘Fixed’ with the implication of a fixed price for a fixed term? This used to be the case but then Ofcom got soft (again) and gave them tools to allow price rises mid contract.

Whether they like it or not, these are no longer the ‘fixed’ contracts we used to know and love.
I’m on a fixed contract, a genuine one. My unit price is fixed until the end of March, 2014 at which point I’ll look for another fixed price deal. Big deal you say but how about this, I have 100% confidence that just like every other time I’ve done this, despite the utilities doing their best to squeeze my wallet dry, my unit price and standing charge will be fixed for another 18-24 months and no surprises excused due to RPI.

If energy firms can do this, why can’t telecoms? Oh yes, OFCOM !!

Still think O2 is innocent? Then try the following online convo I had with an O2 advisor when I asked if they still did ‘fixed price’ deals. Initially I was told they did and my price wouldn’t change … up until the fun started 😉 Enjoy:

Joel: at 10:17:27
This is applicable for all our existing customers as well as new.
Giles: at 10:17:35
What happened to the ‘fixed’ bit?
Joel: at 10:17:53
Just a recent update we’ve received.
Giles: at 10:18:20
I could understant customers who’s fixed term had expired but …
Giles: at 10:18:34
not in a fixed term
Giles: at 10:18:54
How can you change something that is sold as fixed, then change it?
Joel: at 10:19:41
This has been decided by the OFCOM and is applicable with all the service providers.
Giles: at 10:20:34
Really? Think Ofcom might have something to say about that claim
Giles: at 10:21:05
So basically, “variable” is the the new fixed then 😉
Joel: at 10:21:13
Yes.
Giles: at 10:21:18
Not exactly fixed anymore
Joel: at 10:21:24
Applicable from March 2014.
Giles: at 10:21:36
And Ofcom made you do this, yes?
Joel: at 10:21:50
Yes.
Giles: at 10:22:38
So it is the law that you MUST change you prices inline with RPI, yes?
Joel: at 10:22:49
Yes.
Giles: at 10:23:09
This is law now? Is RPI like VAT then?
Joel: at 10:24:05
Its not VAT, it’s an inflation rate.
Giles: at 10:24:35
But it is law that you have to change you prices inline with VAT?
Giles: at 10:25:06
Sorry, RPI I meant
Joel: at 10:25:31
Yes, its for all the customers and on all the service provider.
Giles: at 10:26:08
And all providers have to change their prices inline with RPI because the law says they have to?
Joel: at 10:26:20
Yes.

Still think O2 is innocent?

If anyone would like to see the entire conversations, I will post both which were taken one after the other. Even better, pose as a potential customer and ask about fixed price deals and see for yourself.

‘Variable’ is the new ‘Fixed !! You saw it here first folks 😉

Peter says:
28 January 2014

Can see you’re a bit het up about this, but getting angry with Which? doesn’t seem to be the most fruitful approach. They can claim a modest victory in getting OFCOM to do something about this, though it seems pretty clear to me that different mobile firms are going to do things differently, and whether that’s ‘avoiding’ the issue in the way that O2 has (perhaps not breaking the guidance, but definitely the spirit, by their alteration to T+C), and Three, ‘avoiding’ any contravention, by just changing their product price for all new customers, so they will in future pay £240 instead of £180 a year…

It’s not Which? you should be getting cross with, but if anyone, the mobile firms. OFCOM needs to strike a balance between the freedom for firms to do things their own way, so long as a contract is deemed fair under the OFT rules, so as to provide the market and consumers with competition.

It’s always the case that when regulations are brought in, some firms will find ways to limit their effects. If you take another example relating to OFCOM, from a few years ago, on the landline market, you’ll see what I mean:

OFCOM brought in a restriction on firms like TalkTalk etc offering landline and calls packages, so that in the event of a customer cancelling with a number of months remaining in the ‘minimum contract’ period, the charges levied by the telco were ‘fair’. Most telco firms pay Openreach around £7/month for the line rental and then charge the customer more, for varying levels of ‘included’ calls.

OFCOM decided that if a customer switches from (say) TalkTalk to the Post Office service, then since TalkTalk is no longer paying Openreach for the line rental, it could only charge the customer for the ‘extra’ service it would have been offering. This amounted to something from £2-£5 per month and not the £12-£15 that the ‘package’ used to cost.

Once this came in, the first telco to change its service was BT. BT introduced “Line Rental Saver” at about £130/year as an advance payment, but in the T+C, made it clear that this fee was “non refundable”. Effectively they had dodged the OFCOM decision and yet made it attractive to some (richer) customers to spend the amount in advance and save £40+ (far more than most savings schemes would pay on the outlay over a 12 month period, so a real saving).

Of course, the other effect of this was to make most customers feel they’d be wasting a larger amount of money if they were to switch (or they’d be paying the significant monthly BT fee anyway). Either way, BT would have more from the customer deciding to switch than the new OFCOM rule would have allowed them to charge as an exit fee.

Bozzy says:
28 January 2014

Been with o2 since the start but this is too much … two price hikes in this contract (2yrs) ..
Phones are cheaper to come by via other companies than the deals given to loyal customers.

When my contract runs out in 5 months .. i’ll be long gone.

Derek-Chelmsford says:
28 January 2014

O2 are masters of rip-offs. On holiday last year the cost of my calls from Greece (islands) were reasonable but phoning from Turkey, 5 miles away, were astronomical. I ended up with a bill of £145. Travel insurers accept Turkey as part of Europe but not O2.
O2 also tried to rip me off on calls from the Isle of Man but eventually reduced the charge. I understand now O2 will charge Europe rates from IoM.
Their customer service is not good e.g. I used their chat line to ask if I could use my mobile to call an 0844 number from Europe as I had a very important reason. Their representative said I could call 844 but this turned out to be impossible.

Averil says:
28 January 2014

I signed a contract with O2 on Thursday 23rd January and received notification on Friday 24th January that my tariff, agreed the day before, was going up by 2.7%. Is this a record? At no point in the discussions with the ‘guru’ was I told that this could happen.

Anon the Mouse says:
28 January 2014

You are well within the cooling off period. I’d take it back today if I was you and get it cancelled without penalty

This latest price rise means that I will leave O2 at the earliest available opportunity. I feel that this sort of rise 2/3rds the way through my contract is unacceptable. And this on top of the O2 broadband/phone split with Sky that ended up costing me more anyway.

Adam Temperton says:
28 January 2014

I still cant see why Ofom cant be forced to re-issue their guidance, to be more in keeping with the spirit of what they were supposed to achieve.

Grant says:
28 January 2014

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!