Phone firms could be banned from rising pricesJanuary 3rd, 2013 • 7 Comments
Phone providers could be banned from raising prices in the middle of a broadband, mobile or home phone contract, according to Ofcom, giving consumers the right to get out of a contracts if providers increase prices on fixed deals.
Ofcom have received 1,644 complaints between September 2011 to May last year, thanks to telecom providers not being clear enough regarding potential price rises in what were believed to be fixed contracts.
“Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts,” said Claudio Pollack, consumer group director at the watchdog. “Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises.”
With BT, O2 and Virgin Media sticking their prices up, customers are only able to get out of contracts under current rules in certain limited situations, which Ofcom seek to change. New proposals expect providers to be transparent about any increases and is considering a blanket ban on price rises during fixed contracts.
If there’s going to be any changes, new rules should come into place in June.
Sounds fair. A contract is a contract: if one party wants to change the the terms half way through then the contract is null (and, in fact, if material loss is incurred the breaker of the contract should have to reimburse that loss).
Or you can get out of the contract
If a contract is for 24 months, at the end of that period it should be up to the provider to ask the customer if they wish to extend the contract. Not for the customer to have the hassle of contacting the provider 30 days before the end of 24 months and having to endure all the sales rubbish from customer services/retentions.
I don’t see why mobile firms can’t increase price plans for new customers only, I am sure that is what they used to do. Then once initial contract is up align old customers onto new tariffs.
Oh and when I got my letter from Virgin Media explaining my home phone package was increasing the small print stated I could leave with no fuss. I then used this to ring and get a better retention deal.
@PaulS – In theory it’s a great idea. However, the issue is that every talkplan would need to be replicated on the billing system. If you then take into consideration how many talkplans are contained in a mobile network’s billing system then you are talking hundreds of duplicates that need to be created. This could then lead to billing errors, customers not being migrated properly from one to another at the correct time.
Lets be clear on the current rules. The mobile networks are allowed to increase their prices in line with inflation once in any 12 month period. If the network wants to increase their prices above inflation then you are allowed to cancel your contract.
What this change will lead to is customers being unable to downgrade their contracts at any time during the 12-24 month period. Contract prices being inflated from the start. Handset subsidies being reduced. Or any combination of the above.
I used to work in Telecoms billing but left after a recent merger……
Was it Cellnet by any chance?
What’ll actually happen is that contracts will be priced from the outset to take account of worst-reasonably-expected inflation over the contract term. If inflation doesn’t turn out to be so high, it’s extra profit for the network. So expect to be paying more from day 1, rather than only partway through the contract instead.