UK telcos under price rise scrutiny

• The UK government isn’t happy with some of the price increase tactics of the country’s communications service providers
• Mid-contract price increases are a major focus
• The telcos and UK regulator Ofcom have been sent a shot across the bows

On Wednesday 26 November, the UK’s embattled chancellor of the exchequer (government finance minister), Rachel Reeves, presented her second annual budget of the current parliament. It was a curate’s egg of an announcement – good in parts, not so good in others – that concentrated on easing the financial burden carried by some people and imposing hefty tax rises on others. It was a wide-ranging presentation that made only passing reference to technology in general or to telecom matters in particular. 

But just prior to the headline-grabbing budget presentation, Reeves and Liz Kendall, the secretary of state for science, innovation and technology, sent a co-signed open letter to the CEOs of the UK’s communications service providers about the virtues of consumer protection. Basically, the letter is a plea for them to keep service price increases to a minimum. 

A separate letter was sent to Ofcom, the UK regulator, which focused on “developments in the telecoms market concerning mid-contract price rises, and the important role Ofcom continues to play in protecting consumers in this sector. We welcome the action Ofcom took in January to increase transparency around how in-contract price changes are presented to customers entering new contracts and note your recent statement expressing disappointment with [Virgin Media] O2’s decision to increase prices.” 

The letter expresses the government’s dissatisfaction “that such [mid-contract] price rises run counter to the spirit of your previous regulatory changes and are particularly disappointing in the context of ongoing cost-of-living challenges facing many consumers.” 

It adds: “As you are aware, inflation remains a key challenge for the government, and we are determined to bear down on it wherever possible. The impact of rising costs on consumers, including in essential services such as telecoms, must be minimised. Building on this work, we would ask that Ofcom produces an interim review of the impact of the January 2025 changes by Spring 2026 with a full review due in 2027.” 

It continues: “This government is keen to play a convening role with industry to underline the importance we attach to these issues. We will be seeking voluntary commitments from industry to protect consumers from unfair pricing practices and would be grateful for Ofcom’s support in the coming weeks regarding this.” 

The letter to telco CEOs adds: “The commitments that industry has made through the Digital Inclusion Action Plan, and wider efforts, such as the provision of the lower-cost social tariffs, are vital in supporting vulnerable and digitally excluded consumers. However… more needs to be done to protect all consumers. Ordinary people should feel empowered when engaging with the sector and confident they are getting a good deal. We are asking you to reinforce your commitment to treating customers fairly, including by confirming customers under contract will not face price rises beyond those that they signed up to. 

“We would also like you to take proactive steps to move legacy customers onto the pounds-and-pence approach for price communications with no impact on the timing of planned price increases. We are also asking that you take further steps to ensure that consumers have a clear and accurate understanding of the quality of service they can expect from their telecoms provider in communications with customers, where appropriate.” 

The CEOs can now look forward to receiving an invitation to attend a roundtable gathering with the government where “further voluntary action to support telecoms customers” will be top of the agenda. 

As for the government? Well, it’ll examine areas where it can do more to enable the sector to drive investment in the UK’s digital infrastructure. 

But the scrutiny is now firmly on the service providers and Ofcom. In January this year, Ofcom told telcos they must display the amount of annual increases in service charges in complete detail and in terms of pounds and pence, and make them available to subscribers before they sign a contract. However, in late October, Virgin Media O2 (VMO2) contacted its mobile customers to tell them, quite matter-of-factly: “From April 2026, your airtime plan will now be increasing by £2.50 instead of £1.80,” the sum that had previously been communicated. No explanation for the decision to hike the expected rise by about 40% was offered. 

Martin Lewis, one of the UK’s best-known and most persistent consumer champions, said VMO2’s actions made “a mockery” of Ofcom’s rules. He has been campaigning to have the government step in and ensure that telcos extend the current 30-day notice period during which subscribers can, penalty-free, depart contracts that have unilaterally changed to their disfavour by their service providers to two 30-day periods – the first when subscribers are told their bills will rise mid-contract and the second when the price rise actually comes into effect. 

It would be a start: Change is needed. “Price increases beyond contract” are hated by consumers and the politicians know it (as do the service providers, but they don’t give a damn). 

Furthermore, penalties charged by service providers to leave a contract where a sudden and unexpected mid-contract price increase is imposed are miserably, punitively high, which suits the telcos just fine, of course, as they are the ones that design and implement them.

It would be a good day for UK consumers if the service providers were no longer allowed, by enforceable regulation, to make a mockery of Ofcom’s guidance. 

– Martyn Warwick, Editor in Chief, TelecomTV