/ Technology

Hit by a mobile price hike? Want to exit without penalty?

Cartoon of happy phone

After more than 2,000 comments and 38,000 pledges on our Fixed Means Fixed campaign, Ofcom’s launched a consultation on how to tackle price hikes on fixed contracts. We still need your support to get the right result.

If you’re a Which? Convo regular, I’m sure you’re aware of all the mobile phone price rises we’ve had to suffer over the past couple of years.

O2 was the last to jump on the price rise bandwagon, with Vodafone, Orange, T-Mobile and Three Mobile hiking their prices beforehand. It’s a practice that will see their customers collectively paying almost £150m extra per year.

Following our Fixed Means Fixed campaign, Ofcom has now launched a consultation on how to protect you and me from such mid-contract price rises. And mobile phone contracts aren’t the only deals on the table; broadband and landline deals are also included in the consultation.

What does Ofcom’s consultation propose?

Ofcom concludes that its current rules are not operating effectively as they don’t meet our expectations that the price of a contract should be fixed. Instead, these rules are leaving consumers exposed to surprise price rises, without offering the ability to avoid them.

Ofcom’s preferred solution is to let customers leave their contracts without penalty if prices go up. At the moment, you’re locked into your mobile deal if prices rise. But how are you locked in? Because exiting requires you to pay a hefty fee – usually the remaining payments on your contract. And that’s no small change – if you’re not too far into a two-year deal, the remainder of your contract will run well into the hundreds of pounds. How exactly can you vote with your feet if you’re forced to pay a hefty fee to move to another provider?

Ultimately, fixed contracts should be at a fixed price. But if providers don’t want to stick to that, you should be able to say ‘sayonara’ and leave without penalty. That would put the power back in your hands – you’ll have the freedom to switch and take advantage of the best deals.

Help us achieve the right solution

However, Ofcom has also put forward other potential solutions. These include issuing further guidance for mobile providers, ‘opt-ins’ for variable price contracts or even maintaining the status quo – an option I’m sure the providers would welcome with open arms.

At Which? we want to see Ofcom act upon its consultation without delay and make the right decision. Not only should you be able to cancel without charge if prices go up, Ofcom must ensure providers tell you about this right before you sign on the dotted line. No more surprises.

So, that’s what we think about Ofcom’s consultation here at Which?, but we still need your help to achieve the right solution. Ofcom’s consultation lasts 10 weeks, so there’s plenty of time to tell the regulator what you think, either by responding on Ofcom’s website or by commenting below. We’ll feed your comments into the consultation to make sure no views go unheard.

Do you think you should be able to exit your contract without penalty if providers put your prices up mid-contract?

[UPDATE 7 March 2013] – There’s just one week to go before Ofcom closes its consultation into price rises during fixed contracts. Have your say by voting in our poll and watch our new Fixed Means Fixed video:

Comments
EH says:
6 March 2013

This is the second unfair price increase from Orange that we have had to endure in fixed term contracts. Their customer service is poor. Fixed should be fixed. On top of this, their Orange Care contract for me is also going up from £6 per month to £7.99 (why don’t they just say £8 and admit to a huge 33.3% increase – which this is). Piracy and disrespect for their customers. I have been a customer since 1997, when my contract expires early 2014 I shall try my best to leave Orange (EE). However, being in a rural area my options are restricted. Also all providers follow each other so making it even more difficult for customers. When I last checked a year ago I was dissapointed to see all the mobile phone providers pricing was much of a muchness, no real competition. They cling together as an industry whilst fleecing all their customers. Its time the UK mobile phone industry is investigated for unfair terms and regulated. A mobile phone is not a luxury these days and they should not be allowed to exploit customers in this way.

pmunc6 says:
6 March 2013

So, they allow me the retain a handset which, on their website, costs between £499 – £549 – don’t understand the price difference as these prices are for phones only?! Why could they not have offered to accept the phone back thereby making their questionable balance more realistic.

Durr says:
6 March 2013

Because part of your tariff will be paying towards that phone, which is how they can offer it for free or a small fee, and the rest will cover the actual network fees. The phone itself never comes into the contract, if you cancel it you pay what is stated in the contract (months left x monthly fee).

Orange User says:
6 March 2013

Good campaign, Which, but please could we have the information in writing rather than in video form in future? The music is distracting and it is simply more difficult to take the information on board. I really don’t care about how many cans of baked beans I could buy for the price of my phone bill. It throws little light, and it’s a distraction which makes concentration on the core facts more difficult. The written word enables readers to take on information at their own speed and more easily ignore irrelevance.

If ‘Fixed means Fixed’ then there should be no price rise until the end of the contract Anything else just gives inertia a chance to trap people.

We should make these rip-off companied pay, by all changing to another supplier when the contract finishes. They are all the same but every provider saves money with customer retention and every new customer (ensuring the new contract is better than the old of course) costs the new supplier to set up. Renewal is much cheaper than the task of obtaining new business. There is a little hassle in retaining your existing mobile phone number but worth it. Vote with your wallet. Another tip is NOT to go to a mobile phone company direct. Instead, arrange your new contract with a well known independent & expert mobile phone shop/website (I won’t name them as although I have no connection and am not a shareholder, I don’t wish to appear anything other than unbiaised). The benefit of this is, inter alia, you can get your new mobile phone without it being locked to the new contract supplier. An unlocked mobile is worth more than a locked one & it is easier to switch when the time comes, to another monthly contract at a much cheaper cost if you are not being supplied with a new mobile. Seeemples

Ray Blackwell says:
6 March 2013

I am currently in discussion with my legal protection insurance, with regards to them maybe taking on this case for me. I specificaly asked the O2 salesperson, if my contract could be increased in price during my contract and was told clearly more than once, ‘no sir your tarriff is fixed at this price for the term of your contract’. I am exploring the possibility of taking o2 to court under the misrepresentation act of 1967. keep your fingers crossed for me.

Brian Gallagher says:
6 March 2013

I have just had a letter today telling me my Orange monthly plan is going up again from the 10th April by 66p which will increase my plan to £21-16 a month. I only payed £17-70 last month, when i went to school this worked out more than 66p. Well done Orange i’ve binned one phone contract with you and this one will follow as soon as its up’ thank you Orange for your non-support over the last 16 years or so.

Jane says:
7 March 2013

After shopping around for the best deal at the end of my last 2 year contract I decided to leave my current provider Orange and go with O2 who offered a better value for money dealfor my situation – a new mid range phone with a package suitable to my needs or as near as possible. The Orange deal was more expensive but when I rang up for the PAC, they then offered a 15% loyalty off the cost of their deal which made it competitive so I decided to stay with orange.

At no stage did customer services either on the phone or staff in orange/ee shops say the prices for the deals could go up and nor did the other network providers I spoke to. I did my homework because it is impossible to get 12 month contracts and I would probably have to accept a 2 year contract and I wanted to be sure I had the best deal.

I agreed to deal on last week on Mon 25 February 2013 including insurance (I have had my phone stolen a few years ago and their insurance works well). This Wednesday 7 March – only 10 days later, I received a letter from orange saying the insurance is going up by £2 a month. The letter is undated.

It is only then I googled this subject I found your website campaign on this. I have completed your survey but the link to the Ofcom on line survey form appears not to work, I would be delighted to complete this form. Will there be any articles in the mainstream media about this? I am so angry about this, if you need someone standing in the high street giving out leaflets let me know!

After my experience of looking around, these shops are full of people being tricked/conned. I am a surveyor and would consider myself to have an above average knowledge of contracts. A fixed term contract for a stated sum is just that. I know it is property law and not consumer law but in a assured shorthold tenancy, the terms of the fixed part cannot be changed for an agreed fixed term usually 6 months. Why should mobile phone providers be able to change the agreed fixed period? I am concerned that with mobile phone contracts so complicated now, the average person on the street is going to be conned by these providers. Ofcom should be protecting the consumer not making things easier for providers to make bigger profits.

Rebecca says:
7 March 2013

When you choose a fixed contract, you (hopefully!) do so knowing that you will be able to afford it over the life of the contract. If prices rise, you may no longer be able to afford the contract, which you couldn’t possibly have foreseen and you should therefore be able to leave without penalty. Given the price rise, it may have been that a different contract would have been more suitable for you from the start. I understand that companies’ overheads may rise during a fixed contract period but that is up to those companies to hedge against these possibilities – they have, or should have, the expertise to do so with all the money they make! It feels like companies are trying to reel you in on a cheap deal only to tie you down and rack up the price. Fixed should mean fixed!

Durr says:
7 March 2013

What annoys me is that I walked past a three store yesterday and they had the exact same contract I am on for £34/mo when they charge me more! Why are they not charging new customers the same? Its obviously just abuse of their customers.

Now how about a group announcing that due to Reasons A+B+C the contract is not providing as good as quality as it was in the beginning and that we will pay RPI % less until this is fixed. It would only be nano seconds before the Mobile Providers are reminding us that we do not have the right and will be disconnecting us very quickly once the reduced payment comes through on normal payment date.

Ofcom need to be on the consumers side with contracts that are blatantly written in the Mobile Company’s favour and need to do like the Office of Fair Trading did yesterday with the Payday Loan companies – give them 3 months to change business practices for the better, or be closed down! It will certainly make them sit up and pay attention.

Owen Biewahn says:
7 March 2013

If a contract is advertised as ‘fixed price’ no change to any costs or prices related to the contract or the phone to which it applies should be allowed.

MichaelM says:
7 March 2013

So the ONS is going to use a new formula under RPIJ in march.. Funny how the price hikes are hitting on the old RPI formula now before that comes to fruition. I smell something underhanded!

pmunc6 says:
7 March 2013

I have just completed a lengthy questionaire set by Ofcom in relation to this matter. I don’t have any idea how I came across it but all of us agrieved mobile phone customers should complete it. The questions are quite interesting and, if we remember it is not the relatively small monthly increase we are against but the fact that the providers feel they can con us in this way. Lets post our opinions wherever we can to ensure we are heard!

If I am the last to know about this questionaire and you have all filled it in already, please excuse me, I am usually the last to pick up on these things! Following is the link I used.

https://stakeholders.ofcom.org.uk/consultations/price-rises-fixed-contracts/howtorespond/form?itemid=1050599&action=submitform&lang=

John says:
8 March 2013

I’m sorry fixed should be fixed. the excuse that its in the t&c’s is just as bad. If fixed is not fixed but is fixed subjection Orange changing their mind when they choose then this should be clearly displayed next to the price of the monthly tariffs. In addition sales staff should make customers clearly aware that their monthly fixed contract is not fixed (surely by not making customers fully aware this falls into the miss selling just like the recent PPI scandal)???

MichaelM says:
8 March 2013

After speaking to @orangehelpers on twitter, after several DM’s of me stating that the ONS is bringing a new way to measure RPI at the the end of the month (the RPIJ) and asking would they reduce our plans if the new formula mandates inflation to be less than stated / ask us to signs new contracts including RPIJ (rpi will no longer be published) they just linked me to the site stating why the price went up.

Completely fobbed off. Ludicrous tactics, I understand all the company’s are doing it but I states that I’m not paying my bills until ofcom rules on this at least. Still awaiting a reply.

hughstjust says:
9 March 2013

I am in a 2 year contract with T Mobile which ends on 1 June. I pay £22 plus VAT for 600 minutes; 500 texts and unlimited broadband. I ever only use 200 minutes plus 100 texts each month so I am paying way too much. I sought to cancel this week but they wanted £58 plus the 3 months fees before they will allow me to transfer out. I hardly need a mobile these days but will now hold on until 1st June when I will then give 30 days notice – not before or they will levy a termination charge. I think I will go to a low usage SIM only tariff with Tesco in June.

KarenM says:
12 March 2013

I have just had a letter from Orange to tell me that the price of my fixed contract is going up. I feel this is unfair. It’s my first contract and I wasn’t told at the time of purchase that prices could rise. I’m not even six months in to a two year contract! Now I’m worried about how much the price is going to go up in the remaining time year and a half!

lin lobb says:
12 March 2013

You have missed one very important point which is: even if we could leave a contract without paying a penalty there will be nowhere to go because all the companies will be up to the same price rises so there will be no point in moving.
If a contract is sold as FIXED there should be no room in the small print to hide add-ons that mean it is not a fixed price for the duration of the contract.