All products and promotions are independently selected by our experts. To help us provide free impartial advice, we will earn an affiliate commission if you buy something. Click here to learn more
UK broadband suppliers are now banned from tying mid-contract price rises to measures of inflation. The tough new rules, enforced by regulator Ofcom, are designed to prevent the "nasty surprises" of inflation-based hikes.
Unfortunately, that does not mean mid-contract price increases are going anywhere. Ofcom will allow broadband providers like BT, EE, Sky, Vodafone, TalkTalk and others to set out contract price rises in pounds and pence.
Ofcom decided to outlaw the practice — used almost universally by nationwide broadband suppliers, with Sky Broadband the only high-profile exception — as it made it almost impossible for customers to accurately calculate the cost of their monthly bills throughout the 12- or 24-month lifecycle of their contract.
Most broadband firms included an extra percentage increase on top of the latest measures of inflation to calculate the annual price increases.
This complicated the process of comparing firms when shopping around for a new deal, Ofcom stated.
Under the new rules, telecom providers are required to set-out all future price hikes “prominently and transparently” in pounds and pence at the point of sale.
This means you'll be able to choose a contract with all of the information they need to work-out how much they will need to pay after the annual price rises in April.
As well as a shake-up for broadband providers, Ofcom's strict new rules will also impact mobile networks and pay-TV companies, like Sky TV and Virgin Media.
Sky has removed its upfront cost from all broadband packages in the latest sale. For a limited time, it's cut its eye-wateringly quick Full Fibre 500 package down to £33 a month — a mammoth saving on the £46 a month out-of-contract cost for the same speeds. But GB News readers can save an extra £1 every month by using our link to sign-up for the same broadband plan
For a limited time, EE has resurrected its record-breaking Black Friday prices across its full-fibre broadband packages. The Winter Sale ends at 11.59pm on January 23, 2025 so you'll need to act fast if you want to lock-in one of these discounts. The price cut will be locked-in for the duration of your contract — and you'll be subject to the new Ofcom rules around annual price rises
Plusnet has waived its £20 set-up fee across all broadband packages — one of the savings available in its latest broadband sale. The internet supplier also bundles 24-month access to Plusnet Protect virus and malware protection, which is powered by Norton. Plusnet will end its sale at 11.59pm on January 23, 2025
In April 2024, when providers were operating under the old rules, the majority of broadband deals rose by 7.7% — in line with the Consumer Price Index announced in February (4%) plus an additional 3.9%.
Other broadband firms increased monthly bills by up to 8.8% in line with the Retail Price Index (4.9%) plus an additional 3.9%.
A spokesperson for Ofcom said: "As we have seen in recent years, inflation can be incredibly volatile and is difficult to predict. Our rules will protect consumers from bearing that risk, and ensure providers are clear about prices customers are obliged to pay over the whole contract period."
The long-held practice of increasing prices based on measure of inflation came under serioous fire following months and months of spiralling inflation figures throughout 2023, which pushed BT, EE, TalkTalk, and Vodafone to increases monthly bills for customers by as much as 14%.
Under these rules, if you paid £30 per month for your internet connection — that inflation-fuelled hike equated to an extra £51 every year.
Under the new rules, all price rises written into a customer’s contract also now need to be set out “prominently and transparently”, at the point of sale. Providers must also be clear about when any changes to prices will occur.
Ofcom Group Director for Networks and Communications, Natalie Black said: "More than ever, households want and need to plan their budgets. Our new rules mean there will be no nasty surprises, and customers will know how much they will be paying and when, through clear labelling."
Several providers offer contracts that do not contain price rises, while others offer deals that allow for unspecified price rises during the contract period. If they do this, they must give customers 30 days’ notice and the right to exit penalty-free, so consumers can avoid the increase.
Uswitch telecoms spokesman Ernest Doku described Ofcom’s new rules as a “transparency tax for consumers”.
He said: “Many providers have now opted for a blanket flat-rate annual price rise that will be even higher than the inflation-linked approach for the average broadband customer.
“So if you’re on a cheaper or average-priced contract, the luxury of knowing what your exact price rise is in advance comes at the cost of an even steeper bill hike – effectively a ‘transparency tax’ for consumers.”
Ofcom issued an example to demonstrate how broadband companies should display mid-contract price rises following the rule change
OFCOM PRESS OFFICE
Ofcom analysis conducted in the consultation period for the price rise ban revealed that four in 10 broadband customers in the UK were on inflation-linked contracts in 2023. But despite the prevalence of these broadband plans, Ofcom found that most customers had very little knowledge of the exact details.
Just 16% of broadband customers surveyed by Ofcom knew their monthly bills could rise, and that any increase would be linked to inflation with an additional percentage added on top. And even when people did actively consider future inflation-linked price rises when choosing a contract, they did not understand them fully and found it tough to estimate the exact monetary impact, Ofcom research found.
In an example provided by Ofcom to demonstrate the new rules, it said a previous advert stating that a broadband plan that costs £30 per month but would rise by “CPI plus 3.9%” would have to change.
Under the new rules, the advert would need to read: “Monthly subscription price: £30.00 until March 31, 2024. Increasing to £31.50 on April 1, 2024 and £33.00 on April 1, 2025."
If you're within the minimum contract term of your current contract — nothing will change. Any annual price rises will be calculated based on the formula that was laid out when you signed up for the contract.
Most likely, that means your new monthly bills will be linked to inflation.
However, if you're outside of the 12- or 24-month contract, it's possible to re-contract with your existing broadband supplier or switch to a new company to switch over to the new "pounds and pence" model. If you haven't moved broadband suppliers in some time, you could unlock lower bills, faster speeds, or both.
BT is the most popular broadband provider in the UK, with over 10,000,000 customers nationwide when combined with EE. If you're one of the millions of people who gets their home broadband from BT, here's how the dual approach will work for the annual price rises scheduled to kick in from April 2025.
"From 31 March 2025, for new and re-contracting mobile customers on the Pounds and Pence model, this annual increase will be an extra £1.50 a month. It will be £1.50 a month for connected devices (including laptops, tablets and smart watches), £2 a month for TV customers, and £3 a month for broadband customers.
"There will be customers on our CPI+3.9% model, because they were already in contract before we introduced the Pounds and Pence change. There will also be some customers with a mix of the two models across different products.
Ofcom's new red-tape doesn't stop broadband suppliers from increasing prices for customers mid-contract. However, it means firms are no longer able to link these annual rises to the rate of inflation
GETTY IMAGESLATEST DEVELOPMENTS
Speaking about the decision to move away from inflation-linked price rises when it was first announced last year Rocio Concha, Which? Director of Policy and Advocacy, said: "Ofcom confirming a ban on unfair and unpredictable mid-contract price hikes is a huge win for consumers.
"Which? has led the campaign to protect millions of households from being blindsided by telecoms price rises and give them certainty about the cost of these essential services.
"With Ofcom calling time on these unfair price hikes, providers must stop this practice immediately. Ofcom now needs to make sure that future mid-contract price rises are set competitively.
"It’s disappointing that ‘prices may vary’ terms have not been banned. The regulator must be prepared to intervene if these ad hoc increases are used as a back door for providers to impose unpredictable price increases on customers."
