O2 blasted by Ofcom after hiking mid-contract prices

Ofcom has criticised O2 for imposing mid-contract price rises warning the move undermines new rules designed to protect consumers from unpredictable bill increases. 

The rise will see monthly bills increase by as much as £4 per month depending on the plan. A typical 30GB handset contract costing £35 per month could now rise to £39, adding more than £48 over a year. Some SIM-only customers are reporting increases of around £2 per month.

Earlier this year, Ofcom banned inflation-linked mid-contract price rises in mobile and broadband deals. Providers must now clearly state any future increases at the point of sale, giving customers certainty over what they will pay each month.

Ofcom says O2’s latest increases appear to breach the spirit of those rule and said: 

“We want customers to have certainty about their monthly mobile bill. Earlier this year we banned unpredictable price rises linked to inflation and instead required providers to tell customers upfront  about any increases in their contract. We are disappointed by O2’s decision. This goes against the spirit of our rules which are designed to ensure greater certainty and transparency for customers when they sign up.”

An O2 spokesperson said: “As acknowledged by Ofcom in its letter to providers, its rules do not prevent companies from increasing annual price changes – for example, to invest in improving networks. The changes we have announced in no way breach any regulatory rules.

 “We appreciate that price changes are never welcome, but demand for mobile connectivity is greater than ever, and any price change customers see on their bills is greatly outweighed by the £700m we invest each year into our mobile network to meet this growing demand. We have written directly to customers about this change, and they are able to exit without penalty if they wish.”

Ofcom has now written to all major mobile operators reminding them of their obligations to treat customers fairly.

Mid-contract price rises have become increasingly contentious over the past decade. Prior to Ofcom’s rule change networks linked annual rises to  RPI or CPI inflation. UK mobile bills have risen faster than wages in three of the last five years.

O2 added a fixed percentage on top of inflation, sparking subscriber complaints and prompting parliamentary questions. The new rules sought to end that practice