The UK communications regulator has launched an investigation into whether telecoms companies were upfront with customers about in-contract price increases following complaints over a lack of transparency.
Ofcom will examine if mobile and broadband service providers made customers who signed a deal with the company between March 2021 and June 2022 sufficiently aware of changes to their pricing terms.
With inflation soaring as the cost of living crisis intensifies, telecoms groups have come under scrutiny from the regulator and politicians over whether they have acted enough to support struggling households and broken transparency rules. UK inflation hit a 41-year high of 11.1 per cent in October.
Most operators opted to increase their prices significantly above the rate of inflation earlier this year, boosting underlying revenue. BT, Vodafone and EE, for example, increased their prices in line with the consumer price index, plus 3.9 per cent.
Ofcom said it was concerned that such in-contract price variations were not made “sufficiently prominent or transparent” at the point of sale, as per the regulator’s rules. If cases of non-compliance are identified, Ofcom may launch an investigation into the named operators.
“As millions of people are having to deal with rising household bills, it is more important than ever that telecoms companies don’t shirk their responsibilities and keep customers fully informed about what they are signing up to,” said Lindsey Fussell, director of the regulator’s networks and communications group.
Ofcom’s latest affordability report, published on Thursday, found that 32 per cent of households are having problems paying for their phone, broadband, pay-TV or streaming bills — equating to more than double the level of April 2021.
It also found that 17 per cent of households are currently cutting back on other spending, such as on food and clothing, to afford their communications services — up from 4 per cent in June 2021.
Dana Tobak, chief executive of Hyperoptic, a broadband provider that opted against increasing its prices above inflation this year, said that Ofcom’s probe was “a great step forward in preventing the consumer harm of mid-contract price rises”.
A Hyperoptic survey this year found that 60 per cent of people were not aware that the price of their broadband would increase mid contract.
BT, which also owns EE, said: “We work really hard to make sure that the annual price rise is clearly outlined and discussed at the point of each and every sign-up or renewal,” adding that the company also explained to customers how in-contract prices changes worked.
“We follow industry best practice, and will be engaging fully with Ofcom’s programme,” it said.
Vodafone said: “We work closely with Ofcom, and will continue to do so in order to support this industry-wide investigation.” It added that it will not be increasing prices for its most financially vulnerable customers.
Source: Economy - ft.com
