Telecoms companies set to rake in almost half a billion pounds from 2024 mid-contract price hikes, Which? finds

Mobile and broadband providers are set to cash in to the tune of almost half a billion pounds from expected 2024 mid-contract price hikes, Which? has found, as consumer organisations call on Ofcom to ban the practice.

New Which? research estimates that telecoms firms will generate £488 million from the April 2024 mid-contract price hikes alone.

The consumer champion estimates that 8.4 million UK households are currently in a broadband contract that will be subject to an inflation-linked mid-contract price rise in April 2024. The 2024 mid-contract price hikes will see these broadband customers pay an estimated extra £221 million to providers.

Meanwhile, an estimated 13.7 million UK adults are currently in a mobile contract that will be subject to an inflation-linked mid-contract price rise in April 2024. This means mobile companies will generate an estimated £267 million from the 2024 mid-contract price hikes.

These eye-watering figures are particularly galling during a cost of living crisis, when many households are struggling to make ends meet and cover the cost of essentials. Whether online banking, working from home, doing schoolwork or keeping in touch with loved ones, a good, affordable mobile and broadband connection is essential to day-to-day modern life.

For far too long, providers have used inflation-linked mid-contract price hikes to place the burden of managing inflation risk onto their customers. This makes it impossible for consumers to choose the right contract for them and manage their household budgets, as they do not know what the total cost of the contract will be upfront.

That’s why the consumer champion has launched its ‘The Right to Connect’ campaign, calling on all providers to do the right thing and stop this practice ahead of Ofcom’s upcoming decision on its review of mid-contract price hikes, to ensure that customers are not impacted by similar unpredictable price rises next April.

Which? and Citizens Advice have written to Ofcom calling on the regulator to ban this practice in its review. This review is a clear opportunity for Ofcom to finally take action against these unpredictable hikes and ensure that the telecoms market offers predictable prices and effective competition.

Rocio Concha, Which? Director of Policy and Advocacy, said:

“It’s absolutely unacceptable that during the most severe cost of living crisis in decades, telecoms companies stand to make almost half a billion pounds from next year’s mid-contract price hikes.
“From working and school to online banking and access to information, a good broadband and mobile connection is essential to everyday life.
“That’s why Which? is calling on Ofcom to ban these unpredictable mid-contract price hikes and give people certainty about exactly how much their contract will cost when they sign up.”

ENDS

Notes to editors

Which? ‘The Right to Connect’ campaign

Access to the internet has become a basic necessity to life in the 21st century – for everything from work and school to socialising, shopping, banking, and accessing essential government services.Which?’s ‘The Right to Connect’ campaign is calling for clearer and fairer pricing for telecoms customers, because when it comes to basic necessities like a reliable mobile or internet connection, consumers deserve clarity.

Research

Which? carried out a nationally representative survey of 2,071 UK adults between 3rd and 5th November 2023.
Respondents were classified as experiencing an inflation-linked mid-contract price rise (MCPR) in April 2024 if (i) they were responsible for paying their mobile network bill or their household’s broadband bill, (ii) they said they were within the minimum term of their contract (or unsure whether they were), (iii) their contract start date and contract length meant they will be in contract post-April 2024, and (iv) they are with a provider that applies inflation-linked MCPRs.
Which? estimates that between 28 per cent and 32 per cent of UK households are currently in a broadband contract that will experience a MCPR in April 2024, with an average estimate of 30 per cent. Based on the survey and the ONS estimate for the number of UK households in 2022 of 28.2 million, this scales up to between 7.8 million and 8.9 million UK households currently in a broadband contract experiencing a MCPR in April 2024, with an average estimate of 8.4 million.
Which? estimates that between 24 per cent and 28 per cent of UK adults are currently in a mobile contract that will experience a MCPR in April 2024, with an average estimate of 26 per cent. Based on the survey and the ONS estimate for the number of UK adults in mid-2021 of 53.2 million, this scales up to between 12.7 million and 14.8 million adults currently in a mobile contract experiencing a MCPR in April 2024, with an average estimate of 13.7 million.
Additional monthly costs for those experiencing MCPRs were calculated by multiplying respondents’ current monthly contract bill by the price rise their provider applies (e.g. CPI + 3.9%). An estimate of 4.5% for January’s CPI inflation was calculated from Bank of England forecasts published on 2 November 2023. An additional 2 percentage points were added for an RPI forecast of 6.5% in January, in line with Office for Budget Responsibility forecasts published 22 November 2023.
On average, providers using CPI could see increases of more than 8 per cent in 2024 while O2 customers could see rises of over 10 per cent.
A total additional cost each respondent will experience across their contract term was then calculated by multiplying their additional monthly cost by the number of months remaining on their contract post-April 2024. The mean of these figures was then multiplied by the estimated number of UK adults and UK households currently in contract that will experience a MCPR in April 2024 to generate the £221 million and £267 million figures.
Some respondents told us they were in the minimum term of their contract but only provided partial details needed to determine their contract status in April 2024 and the additional price they will pay. We estimated the proportion of these that would experience an inflation-linked MCPR in April 2024 and used the average total increase across the whole contract term figures above.
The broadband figures include some contracts that include landline and/or Pay TV. These are included where the respondent did not know how much they pay for broadband separate to landline and/or PayTV. In the vast majority of these cases, landline and Pay TV elements of contracts will also face the inflation-linked MCPRs.Our broadband figures do not include providers that use ad-hoc mid-contract rises (Now Broadband and Sky).

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful. The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at endorsementscheme@which.co.uk.