Three Mobile has increased its prices by 3.6% for existing customer’s monthly plans following Orange and T-Mobile before it. For fear of bastardising Lionel Richie’s lyrics… ‘Three times a price rise’.
Anyone who signed up to Three before 8 March 2012 will be hit by the price hike from 16 July.
Mobile and mobile broadband customers will have to swallow a 3.6% price rise. On a £25 monthly plan that will be around 90p extra a month, or another £11 per year.
Only contract prices will change, with calls and data remaining at their current levels. Pay-as-you-go customers will also be unaffected. If you’re going to be affected, Three will contact you by text, email or letter between 21 May and 1 June to let you know. Three said of the price rise:
‘We know that increases are never welcome, so it’s not a decision we’ve taken lightly and we’re confident that your plan still represents excellent value for money.’
It’s all in the terms and conditions
It’s understandable really – if you signed up to a contract, whether 12 or 18 months, your expectation would be that the £25 or so monthly price would stay static. Not so, mobile companies have a clause in their T&Cs that allows them to increase contract prices on a yearly basis as long as they’re under the rate of inflation (retail prices index).
And when we’ve questioned the regulator Ofcom on this, it has told us that the price rises are ‘not likely to be a breach of current legislation’.
But when we actually ask mobile customers whether they know prices can go up, 94% of 1,036 people voted in our poll that they didn’t realise their contracts weren’t at a fixed price.
It might be legal, but it’s not a line of fine print that many people are aware of. And when customers are told that they can’t cancel their contracts early without charge, the red mist starts to descend.
Make price rise terms clearer
The key is making the fact that prices can rise by inflation clearer to new customers, instead of hiding this clause in reams of terms and conditions. Our principal advocate Mark McLaren said:
‘On the one hand, it seems consumers’ expectation is that a mobile phone contract is a fixed price for a fixed term. On the other hand, mobile companies are able to increase prices by RPI during the term of the contract. This is a contradiction that can only be solved by either regulatory intervention or, at a minimum, better information to consumers at the point of sale.
‘That’s why we welcome the fact that Ofcom’s priorities for 2013 include “promoting effective choice for consumers by ensuring clear information on service, price and quality is available”.’
Are you a Three customer who will be hit by this price rise? How do you feel about it? Did you know that mobile contracts aren’t strictly at a fixed price?
[UPDATE 25/05/2012] – As you know, we’ve been talking to Three. Which? doesn’t think it’s fair to increase prices in this way without giving consumers the ability to cancel as a result of the price increase. We think that when you sign up to a fixed rate deal, that’s what you expect it to be. Fixed, for the period you agreed to.
We think that Three should recognise this and do the right thing by allowing those customers who can’t stomach this increase to cancel their deal without penalty.
A spokesperson for Three responded to us as follows:
‘Despite costs increasing in a number of areas within our business, we have not passed on an RPI level rise to our contract handset customers in the nine years we have been in operation. Increasing our prices for existing customers is a decision we have not taken lightly. We know that increases are never welcome and we have tried to do this in the fairest way possible for all of our customers. We are confident our plans continue to offer the best possible value for money.’