Ofcom confirms mobile and broadband bills overhaul date | Personal Finance | Finance

Ofcom has set the wheels in motion to clamp down on “confusing” inflation-based mid-contract price hikes for mobile and broadband customers, with a start date now confirmed for the new regulations.

The telecoms regulator is overhauling the current system, mandating that providers such as EE, BT, and Vodafone must clearly communicate to customers the exact “pounds and pence” impact of annual contract increases. This transparency-first approach will take effect for contracts signed from January 17, 2025.

Presently, broadband and mobile firms can raise prices mid-contract based on inflation figures from March and April, with an additional leeway of up to 3.9%. The standard benchmarks for these adjustments are December’s Consumer Prices Index (CPI) or January’s Retail Prices Index (RPI), leading to this year’s price surges ranging from 7.9% to 8.8%.

However, the sting of high inflation over the past two years has led to substantial bill increases for consumers, with last year’s rates soaring by as much as 17.3%. Earlier this year, Ofcom expressed its concern that the implications of these rises were not fully grasped by customers, prompting a review into the practice.

By April 2024, Ofcom had deduced that a significant majority60%of customers were tied to contracts with inflation-linked price increments, reports the Mirror.

Ofcom’s latest research reveals a startling lack of awareness among consumers, with over half of broadband (55%) and mobile customers (58%) in the dark about what inflation rates like CPI and RPI actually measure. Furthermore, a mere fraction of those whose providers implement inflation-linked price hikes16% of broadband users and 12% of mobile usersare aware of these increases and understand their link to inflation plus an additional percentage.

In response to this confusion, telecom giants BT and Vodafone have already amended their policies. Other providers now face a January deadline to revise their contracts accordingly.

Cristina Luna-Esteban, Ofcom Telecoms Policy Director, has voiced her concern: “With household budgets squeezed, people need to have certainty about their monthly outgoings. But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.

“We’re stepping in on behalf of phone, broadband and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily and take advantage of the competitive market we have in the UK.”