O2 and EE to raise bills mid-contract again
O2 and EE are to hit customers with a 1.1% rise in prices over the next couple of months, equivalent to the February rate of inflation (as measured by the retail prices index).
The price hike comes just over a year since telecommunications regulator Ofcom ordered mobile phone network operators to allow customers to exit their mobile phone contract without penalty if they increase the cost of monthly deals.
However, the ruling only applied to customers who signed contracts on or before the date it was introduced – on 23 January 2014. Those who took out contracts afterwards have it written into their contract that the provider is allowed to increase their monthly price mid-contract.
Here are the new costs in full:
02 customers on a Pay Monthly (including the O2 Refresh Airtime Plan but not the Device Plan, which is a separate credit agreement for the handset), Sim Only, Standard or Mobile Broadband tariff will be affected.
The network said customers on a Sim Only tariff, or one of its non Refresh Pay Monthly tariffs, paying £28 a month would see their bill rise to £28.30 from their April bill onwards.
02 is also upping some bundle call charges from 1 April.
- The cost of making voice calls in the UK will rise from 40p to 45p a minute from 1 April.
- Calls to Europe, the US, Alaska and Canada will rise from 60p to £1 a minute, while calls to Eastern Europe and the rest of the world will also rise from 80p to £1 a minute.
- Meanwhile, text messages to Jersey, Guernsey and Isle of Man will no longer be included in the usual bundle allowance and will instead incur 20p charge per message from 14 May.
EE Pay Monthly customers who have been on their existing tariff since before 11 February 2015 (excluding those who joined or upgraded between 23 January 2014 and 25 March 2014 whose tariffs are protected) will see their bill rise by 1.1% from 26 March.
Pay monthly customers who joined or upgraded on or after 11 February 2015 won't see any uplift in the cost of their tariffs until March 2016.
EE said the RPI tariff increase move will add around 31p per month to the average bill.
While the increases may not be particularly significant, unhappy customers of 02 or EE who signed up to fixed-prices tariffs on or before 23 January 2014 are entitled to terminate their contract without penalty, under rules laid down by the regulator.
How to break free from your contract
Ernest Doku, telecoms expert at uSwitch.com, said: "Ofcom has taken big steps to protect mobile users from mid-contract price hikes, but opportunities clearly still exist as bill payers continue to be subject to annual increases.
"Mobile networks do now make it clear when customers sign up that they will increase their prices in line with RPI once a year. In doing so, it is very hard for customers to leave their contract without penalty when this inevitably happens."
However, he added that there are some ways of breaking free without penalty midway through a contract.
"Take a look at out-of-bundle costs to see how much they've risen. If you regularly dial international numbers, for example, and these prices have increased substantially, you may be able to prove that it constitutes a 'material detriment' to your experience and make a good case for leaving early," he said.
He also pointed out Three and Tesco Mobile make a price promise to customers, "pledging to charge the same amount for the entire minimum duration of their contract, and offering protection from any mid-contract price hikes".
In a statement Tesco Mobile (which is a 50:50 joint venture between Tesco and 02) said the 02 and EE price hike "comes on top of the 2.7% that EE, O2, along with T-Mobile and Orange added to their customer phone bills around this time last year. Virgin Mobile increased its customer's prices by 2.5% last year."
Replaced as the official measure of inflation by the consumer prices index (CPI) in December 2003. Both the Retail Price Index and CPI are attempts to estimate inflation in the UK, but they come up with different values because there are slight differences in what goods and services they cover, and how they are calculated. Unlike the CPI, the RPI includes a measure of housing costs, such as mortgage interest payments, council tax, house depreciation and buildings insurance, so changes in the interest rates affect the RPI. If interest rates are cut, it will reduce mortgage interest payments, so the RPI will fall but not the CPI. The RPI is sometimes referred to as the “headline” rate of inflation and the CPI as the “underlying” rate.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).