The founder of Zen Internet, which locks-in prices for the duration of your contract, has blasted rival companies that rely on inflation-linked annual price rises
BT, TalkTalk, EE, Plusnet, Virgin Media and Sky customers can all expect bills to increase this month
Broadband boss Richard Tang has lambasted some of his closest rivals for relying on inflation-linked mid-contract price rises every year and urged industry regulator Ofcom to enforce an outright ban. Nationwide broadband suppliers, including the likes of BT, EE, TalkTalk, Plusnet, and Virgin Media, all rely on measures of inflation to determine annual price rises for existing customers.
The long-held practice has come under fire following months and months of spiralling inflation figures, which have led to BT, EE, TalkTalk, and Vodafone customers seeing an increase of over 14% last year. Virgin Media O2 was close behind with a 13.8% increase for all customers in early 2023. Sky, which doesn't link its price rise to the CPI or RPI measures of inflation, increased bills for broadband and television customers by 8.1% on average.
Despite falling inflation figures, things aren't much better this time around. BT, Plusnet, EE, TalkTalk and Virgin Media customers will see monthly bills rise by a minimum of 7% this month — totalling an extra £28 per year for the average bill-payer.
Zen Internet CEO Richard Tang said it was “a shame” that Ofcom was required to step-in, rather than major internet providers realising it was “the right thing to do” to ditch such contracts.
Delighted to be named the only Which? recommended provider for broadband for the 4th consecutive year 😊🙌👏 https://t.co/Eyxm1yZRzP
— Zen Internet (@zeninternet) March 28, 2024
In December, Ofcom proposed a ban on the practice, but a final decision is yet to be announced. Even if the ban had kicked-in immediately, it would be too late for the latest round of inflation-linked rises.
Mr Tang said: “Typically broadband customers will pay for 13 months in a year rather than 12, thanks to inflation linked mid-contract price rises. Zen has never done this in its 28 years of trading.
"The proposed Ofcom ban on this practice will go a long way to fix the problem, giving consumers more certainty about what they are going to pay. It’s a shame the regulator has had to step in and that the major providers didn’t just realise it’s simply the right thing to do.”
Zen Internet, which relies on broadband infrastructure maintained by BT-owned Openreach — making it available nationwide, has published new research which shows almost half of people find a mid-contract price rise above inflation unfair.
In total, 75% of those surveyed supported Ofcom’s proposed ban on inflation-linked price rises.
The survey of 2,001 adults in the UK was commissioned by Zen Internet and carried out by Censuswide in March. It found that, despite dissatisfaction over the annual price rises, a fear of switching between broadband providers was holding many people back from moving to another supplier.
Those asked identified the hassle (27%) and cost of switching (19%) as reasons for stopping them changing to a new provider, with 18% saying they were worried about a disruption to their internet connection because of it.
Switching between broadband brands that run on infrastructure from Openreach, like EE, BT, Sky, Vodafone, TalkTalk, and Plusnet to name just a few, is relatively simple. There’s no need to contact your current supplier to let them know that you’re leaving, instead, all of the admin is handled by your new broadband provider when you sign up for a new contract.
The two competing brands will organise a switchover behind the scenes, so you're not left without an internet connection for more than a few hours. If things dogo awry during the switchover and you’re left without broadband for more than one working day, you'll automatically be compensated for the inconvenience.
This hassle-free switching has been commonplace for over a decade, ever since Ofcom threw its weight behind tough switchover rules back in 2013. It means you can ditch your current broadband supplier with relative ease, so you can switch to a deal with lower costs, faster speeds, or a better bundle with paid-for TV and other perks.
However, there was one exception: these measures only worked with brands on the Openreach network.
The One Touch Switching Company was created to bring these same rules to all broadband providers in the UK for the first time. Suppliers like Virgin Media, Hyperoptic, Community Fibre, and G.Network to name a few, all own and operate full-fibre networks distinct from Openreach.
Since these separate networks are not covered under the existing rules, switching between an Openreach-powered brand to a standalone fibre network is much more onerous. Fortunately, that looks finally set to change when this new "one touch" system is finally introduced after multiple delays in September 2024.
Zen Internet was one of a handful of smaller broadband providers to finish above the big four broadband firms – BT, Virgin Media, Sky and TalkTalk – in consumer group Which?’s latest broadband rankings.
Natalie Hitchins, Which? head of home products and services, said consumers “could be better off choosing a smaller company which prioritises customer service over a giant that also stings them with unfair mid-contract price rises”.
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Mr Tang said: “Research shows price, reliability, and speed are top factors when choosing a broadband provider and Zen has again scored highly across these categories in the annual Which? survey of broadband providers, securing our place as the only Which? recommended provider for broadband.
“We have a huge ethical focus putting people and the planet ahead of financial return for shareholders. Switching broadband is easier than people may think, and consumers have got the power to make the choice.”
