Mobile phone and broadband customers are in a “lose-lose” situation due to rising mid-contract above-inflation price hikes and “crippling” exit fees, a consumer watchdog has warned.
Which? is calling out mobile phone and broadband companies, such as Virgin Media and O2, for raising prices mid-contract.
Media regulator Ofgem proposed banning mid-contract price rises due to the “substantial harm” consumers are at risk of.
However, this will not come into effect before the next wave of rate hikes in April with Virgin Media and O2 expected to raise prices by up to 8.8 per cent.
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Mobile phone and broadband customers face above inflation-hiked bills and 'crippling' exit fees
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This is made up of the 4.9 per cent Retail Price Index (RPI) rate of inflation and an “arbitrary” 3.9 per cent, according to watchdog Which?
The consumer advocacy group is warning that those under contract who want to leave their deal face being hit with an “exorbitant” exit fee.
According to analysis from Which?, a customer with Virgin Media for their broadband and O2 for their mobile could be hit a combined exit fee as high as £692.37 if 12 months were still remaining on their contracts.
When the companies merged, customers of Virgin Media have transitioned over to the O2 with the providers offering bundled deals for consumers.
Which’s calculations suggest an in-contract Virgin Media customer could see their yearly broadband bill rise by £39.14, or face an exit fee of £403.91 if they were to leave their contract a year early.
Rocio Concha, the group’s director of policy and advocacy, explained: “Virgin Media and O2 customers face a lose-lose choice between huge price hikes and crippling exit fees.
“This comes on top of up to 17 per cent increases faced by some O2 customers last year – few would have anticipated such steep price rises when they signed up.
“Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.”
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GETTY IMAGES | PICTURED POSED BY MODEL | GBNIn response, a Virgin Media O2 spokesman said: “2023 was a record year for traffic on our networks as customers used our mobile and broadband services more than ever.
“We are investing heavily to ensure we continue to provide the fast and reliable connectivity our customers rely on, and the amount we receive from price increases is greatly outweighed by the £5million we invest every single day to upgrade our networks and services to give customers a better overall experience.”
According to Virgin Media and O2, customers face hikes of “up to” 8.8 per cent because the additional 3.9 per cent increase on top of RPI would not be added to the bills of “millions” of customers.
The companies asserted the price increase would only be applied to customers’ airtime plans, not their device plans.