/ Technology

Victory! Ofcom’s new rules to stop mobile price hikes

People celebrating with mobile phone contracts

We won! Together we convinced Ofcom to take action on mobile phone price rises. The regulator today announced the results of its consultation, which was as a result of our campaign.

Ofcom opted for our preferred action – to let you exit your contract without penalty if your mobile provider wants to hike prices. These new rules will apply to contracts signed after 23 January 2014. Ofcom’s Claudio Pollack said:

‘Ofcom is today making clear that consumers entering into fixed-term telecoms contracts must get a fairer deal. We’re making it clear that any increase to the monthly subscription price should trigger a consumer’s right to leave their contract – without penalty.’

Working together to convince Ofcom

After heavy lobbying from the mobile companies, there was a very real threat that nothing would be done at all. However, Ofcom has stood firm and done the right thing.

We’ve been working hard to convince the regulator to make the right choice. This year our research confirmed that most of us don’t understand ‘RPI’ price rises, and our undercover mystery shopping demonstrated that mobile phone shops aren’t being all that upfront. And you’ve been busy too, signing our petition and spreading the word.

It takes time to turn an entire industry around, but with the support of more than 58,000 of you, we convinced Ofcom to take action on unfair mobile phone contracts.

The birth of a campaign

Back in 2012, thousands told us that you were confused and annoyed about price hikes from your mobile company. We agreed – the mobile industry wasn’t playing fair and so we launched our Fixed Means Fixed campaign.

We’ve witnessed mid-contract price rises from all the big mobile companies (Vodafone, Orange, T-Mobile, Three, O2). This resulted in their customers having to collectively pay £123m more than they’d budgeted for.

The big kicker is that you can’t show your dissatisfaction by voting with your feet. Many were stuck with months left to pay, with your provider expecting you to pay it all up if you wanted to leave. All the while they pointed to little-known terms in the small print. That’s about to change.

Your support secures victory

Thanks to you, millions of mobile phone, broadband and landline customers will benefit from new rights. If mobile providers want to hike prices on fixed contracts, you’ll be able to show them what you think by cancelling without having to pay a penny.

The new rules should also be an incentive to stop providers from increasing prices in the first place – so that they can keep their loyal customers.

This is your victory, so make sure to share it with your friends and family. We’ll be keeping a watchful eye to make sure these new rules are implemented swiftly. Congratulations!

Comments

Brilliant. This is a good opportunity to advertise what Which? is doing for consumers and perhaps pick up some more subscribers.

What happens in the case of a contract that includes a mobile phone? Can the company demand its return if you cancel a contract because of a price rise?

Thanks Patrick.

giverous says:
23 October 2013

I suspect this is another reason for O2 splitting handset payments away from contract payments. That way they can let you exit the contract for your services, and keep you on the hook for the handset payments.

paul says:
23 October 2013

Is it ironic that my phone company vodaphone text me today to let me know that they’re increasing my prices – starting in december?..

Barry says:
23 October 2013

Message received from Vodafone says:

“We’re making some pricing changes for services outside your monthly allowance of minutes, texts and data from 1 December. If you find yourself frequently using more than your allowance, we have some useful ways to help keep your costs down. Find out more here

http://www.vodafone.co.uk/pricingchanges21

Thats the message I received today at 10:55am. What significance does this have for my current contract obligations?

Anonymous says:
25 October 2013

yes i had one but they dd not inform me that vodafone to vodafone they stopted they said they couldnt tell everyone im a disabled person tried to get sense why 3 bills were hughe i got no where its cost me nearly £1,000 my carer has the other number of mine there on phone long tme 2 make sure im safe and if im down they keep me chatting to help me i have asked my money back on the voafone to vodafone calls they lied again today said theres 07 numbers on it ive even was told it was internet funny both phone o not connect to internet 2 old, seeing your post proves they sent price hikes 2 all why did they not tell me and leie to me ive lost count times ive called emailed them now i can ill afford £1,000 , punds after brain op and stroke im tring to find anyone who can advise or help on who i get intouch with for help

john lloyd says:
28 October 2013

You have my every sympathy but I cannot understand your script. If you could make yourself to be clearly understood one could support you more. I realise that “textspeak” is fashionable but the rest of us don’t understand what you are trying to say. Take a few minutes to try to make your comments comprehensible and we can all try to help. Gobblededook we don’t fathom.

A big well done to Which and a victory for common sense.

Even better, I would like to see 30-day SIM-only contracts become the norm across the industry; there is no need for these long contracts if we do away with combined selling of phones and service contracts. I would like to see unbundling of the goods and the service to promote competition and transparency.

Subsidising handsets through inflated monthly service charges:
– Encourages consumers to acquire handsets they cannot truly afford through an unhealthy “buy now pay later” consumer debt culture with a disguised loan from the mobile network.
– Distorts competition by disguising the true price of the handset and of the service, as opposed to a SIM-free handset and SIM-only service.
– Encourages wasteful acquisition of new handsets because consumers mistakenly believe they are receiving the handset for free or for very little.
– Necessitates long contract durations in order to spread the cost of the handset, which inhibits competition by preventing consumers from switching networks.
– Causes consumers to continue paying the inflated monthly charge even after they have paid off the subsidy of the handset, unless they remember to take action at the end of the minimum contract period.

Subsidised handsets are usually SIM-locked which:
– Inhibits competition as it makes it more difficult to switch networks.
– Prevents consumers from using local SIM cards abroad, allowing UK networks to impose unreasonably high roaming charges by excluding foreign competition.

For these reasons, Ofcom should encourage unsubsidised SIM-free handsets and competitive SIM-only contracts to become the norm, as is common in many other countries. At the very least, networks should be forced to unbundle the monthly handset subsidy repayment and the monthly charge for service (like O2 have started doing), itemising the two separately with independent contract durations and even an APR for the loan. The monthly handset subsidy repayment should not be allowed to continue after the cost of the handset has been paid off.

Steve says:
27 November 2013

I wholeheartedly agree – the more people who see these long contracts for what they are – a punitive tie-in, the better. I believe that 24 month contracts are inherently unfair – who knows what their circumstances are going to be in 24 months time?

Unbundling the handset and services costs is a sterling idea and one that I think Ofcom should encourage as much as possible. I do not believe O2 have done this out of the goodness of their own hearts, but as a way of circumventing the Ofcom ruling – there would be nothing stopping them from raising the payments for the handset for example and not allow contract termination. Admittedly it’s a tactic more likely to be used by the likes of Three – they are a law unto themselves and excel at extremely poor service.

At the very least, the networks should be forced to include in their promotional materials, the true cost of the handset versus buying it outright at the manufaturers RRP and a comparable sim only deal.

The least Ofcom could do is mandate that 30 day contracts must be available for all handsets at service prices comparable or better than those lengthy contracts.

As far as sim-locks go, they should be made unlawful. There is no case business or otherwise for having them. If you decide to use another provider, you are still under contract to the original provider. Sim Locks are anti-competitive, pure and simple.

Rich says:
23 October 2013

Does this work retrospectively – all those who were told they couldn’t leave their term, or opted to carry on paying under protest – does this mean they can now leave and/or be reimbursed?

Three may well now welcome the news, but they penalised many people last year when they felt common sense was irrelevant.

Rich says:
23 October 2013

Must suck to be someone who took your earlier advice, then. I’m glad I folowed my own path.

Though I do appreciate the work Which? have put in on this matter, I find the outcome to be something of a hollow victory for the hundreds and thousands of people who came here for assistance all those months ago.

Rich says:
24 October 2013

Ooh, based on the voting of my comment, it seems quite controversial. That’s somewhat shocking to me, but hey-ho

.https://conversation.which.co.uk/technology/three-mobile-pay-monthly-contract-price-rise-cancel/

That was started in May of 2012 . In December’s last year, Which? concluded that the mobile companies stood to gain an additional £100 million or more in additional profit following those price increases.

We’re now 17 months from the beginning of that conversation. People could, and with hindsight should in my opinion, have left their contracts because the price increases were unfair, and the terms and conditions were often poorly written and/or implemented. They simply were not enforceable.

Advice from here was to pay under protest and await the ruling. Sadly, it has taken a rather long time to arrive at the said ruling, and as it is not retrospectively applied and the majority of people in that discussion will now be well outside of their contractual terms, this does feel hollow.

A win for Which? and consumers, certainly. I’m very glad that cutie contacts will be fairer for the consumers entering in to them. But it does feel extremely hollow for those who were stung all those months and years ago. Those of us who stood firm and left have become wise to the potential pitfalls, and many moved to PAYG. Others who weren’t in a position to stand up for themselves so firmly are the ones who have ultimately lost out.

The mobile companies may have made an additional £150m since May 2012. Future contacts may be better for consumers after these changes, but the winners were the mobile companies.

Hence I am glad Which? took action, but it still feels quite hollow for those who were affected at the time.

Rich says:
24 October 2013

Swiping keyboards have a lot to answer for. Cutie contacts? Rubbish punctuation? Oh dear. Sorry! Hope it makes sense overall.

Anonymous says:
25 October 2013

can anyone please help vodafone have taken nearly £1,000 , of me im disabled they did not inform in anyway at all theyd stopted vodafone to vodafone they have told me all different storys i got botto ast friday but that was 3 bills over nearly 400 pounds each i kept phoneing emailing asking why no one would tell me infact they bare faced lyed told me it was internet allsorts never 1’s real reason no my carer has the 2nd number to ake sure im safe im alone i had brain hemmrage and a stroke, my carer sometimes can be on a hour if im not well or down i honestly havent got the oney they already took it , now theres no money to pay my normal bills ive no money for food nothing is there any body or department that could help me please its not like id not tryied to find out what was going on i did i dont know where to turn please advice who if anyone i can get some help off 2 get the money from the vodafone 2 vodafone calls which was in my contract and they pushed me into another year or they cut me off there must be someone who can help me

Steve says:
27 November 2013

Sorry, but that’s of no use to me (or many many others I suspect) who will never sign another mobile phone contract again. There is simply no good reason to do so. The amount of stress that I went through with Three was extraordinary – they have absolutely no morals whatsoever and very much doubt any of the other networks are any better. Frankly, I want my money back from three – something their own contract provided for before they attempted to retrospectively change it. Their ‘interpretation’ of their own contract was effectively the same as saying night is day.

No, these companies have lost my trust and I will never again sign a contract that ties me in for any more than 30 days – it’s all they deserve.

As far as handsets go, I’d rather buy mine outright and be able to flick the bird (if you’ll excuse the expression!) to any company that dares to give me poor service.

The sooner GiffGaff get 4G and a decent signal in my area, the better – they are the only company who have the common decency to trat their customers as people and not cash cows.

This is a terrific campaigning outcome – a real “back of the net!” moment to enjoy. I think NFH has spelled out excellently the kind of consumer covenant that ought to exist with mobile phone contracts – and, by extension, with other utility supply contracts. His concise analysis of the issues and remedies is perfect. Long term contracts and adverse small print should be outlawed for such a universally-required facility.

I give Two Stars to Ofcom – they would have got three if they had acted sooner [although I acknowledge that keeping up with this industry when in profit-driven rather than user-driven mode is nigh on impossible].

Jim M says:
23 October 2013

So if this doesn’t come into effect for 3 months, it makes sense to hold off on entering into a fresh contract I suppose!

Glad I found this. Thanks,

alamaias says:
23 October 2013

This seems like it will force the seperation of hanset and contract. I have never bought a mobile outright because it inevitably works out cheaper to get the handset with a more expensive contract. Not sure how i feel about this :/

alamaias says:
23 October 2013

*invariably, not inevitably.

Adam says:
23 October 2013

So if my contract has been increased in the past 12 months (which it has) am I know liable to cancel without problems now?

Adam says:
23 October 2013

Now*

Phil says:
23 October 2013

Does this mean that even small price rises when you are in contract you can leave without financial penalty.
The reason I ask is I’m with T Mobile and over the last few years they have kept prices increase inside their T&C’s.

BabyParrot says:
23 October 2013

As this is not retrospective, not much help to the thousands of us already locked into a two year ‘fixed price’ contract. Also let’s face it, as all the providers are as bad as each other, who would you switch to. If lthey all increase their prices at the same time and at the same levels, where would you go anyway! If as has been suggested, the energy companies have been colluding, what’s to stop the phone companies from doing the same

Stephen says:
24 October 2013

It’s not retrospective so people who saw price increases in the past are not affected by this. That doesn’t mean that people who are currently in existing contracts but see price rises in the future can’t use it.

Sorry for not sharing the love, but to me , this doesn’t go far enough. I’m half expecting a wave of price hikes to hit before the new year just to bet the deadline. These rules should have been implemented now, or at least within 30 days, to prevent mobile phone companies from giving 30 days notice of a price hike.

The next step with mobile phone networks will be forcing them to cease their unlawful above-cost payment surcharges for not paying by direct debit, which are outlawed on contracts starting since 6th April 2013. Almost all the mobile networks are blatantly ignoring the Consumer Rights (Payment Surcharges) Regulations 2012. The worst culprit is Three which openly states on its web site “You’ll be charged an admin fee of £4.08 each month if you pay by internet or telephone banking“. How can a company state so blatantly on its web site that it is surcharging unlawfully and the authorities take no action?

Excellent work guys! And welcome to me as a new subscriber 🙂

Can you work on the internet services next? Virgin media keep hiking my bill every few months with no way to leave.

So if i entered a 2-year O2 contract in December last year and they want to increase my monthly payments in February, i can cancel? Or is it only people taking out contracts from January onwards? Good article, and well done Which!

No, you couldn’t cancel. You’ll have to put up with potential price rises until the end of your contract.

Carol says:
23 October 2013

That’s not how I read it, if the price rise is after Jan 2014 regardless of when you took out the contract you will now be able to cancel without penalty.

Stephen says:
24 October 2013

Yeah, it just doesn’t affect price rises that have already happened.

Chris says:
26 October 2013

If it was a good article you wouldn’t need to ask your question. Good consumer journalism covers all the bases.

waynep says:
23 October 2013

This is fantastic news for consumers, WELL DONE WHICH!!!! I will be subsribing, I need a new TV and everythin I have purchased with a WHICH recommended label thus far, has lasted and performed far better than I anticipated.

Chris Walton says:
24 October 2013

Well done which?

Another small victory for the consumer.

How about flexing your muscles on the TV companies who do the exact same to their customers by offering a fixed term contract only to push the prices up during its course, leaving the customer with few options other than accepting the price rise.

Perhaps we need blanket legislation for all consumer contracts to mandate that where a consumer contract requires periodic payments during a minimum contract term, then those periodic payments cannot be increased during the minimum contract term (except for increases in VAT).

I cannot think of any scenario where a business would be justified in increasing periodic payments during a minimum contract term. If businesses don’t like it, then they can stop imposing minimum contract terms.

colin says:
24 October 2013

Well done Which, at last we have someone to take on these companies! hopefully to stop hike price on energy companies in future? If government cannot control!. Good luck in future with all.