Mobile phone users face the choice of “exorbitant” mid-contract price hikes or exit fees of more than £400, a consumer group has warned.
Which? is asking providers to reconsider price increases, regardless of whether they are “transparent,” as consumers grapple with the ongoing cost-of-living crisis and allowing customers to terminate their contract without penalty if charges rise by half of the contract.
He also urged them to cancel the inflation-laden 2023 increases for financially vulnerable consumers.
The “big four” mobile phone companies -EE, O2, Three and Vodafone- raise prices every April in line with the Consumer Price Index (CPI) or Retail Price Index (RPI), plus 3, 9% additional.
EE, Three and Vodafone use CPI, leading to price increases of more than 14% this year, while O2 uses the higher RPI measure, meaning some customers will face increases of more than 17%.
Since price increases are often applied mid-contract, customers must either accept them or pay exit fees to leave.
Price increases are higher for bundled contracts when the customer pays for both usage and the phone.
Which? calculated that the average EE customer on a bundled contract would see an annual increase of £66.36, while Three’s typical customer would see an increase of £56.40.
The same EE customer would face exit fees of £424.67 for leaving a year early and Three’s customer would have to pay £379.46 to end their contract.
Also, using the example of an EE customer who signed a 36-month contract for an iPhone Pro Max with unlimited data, which one? he estimated that the customer would pay an additional £105 for the phone over the next year due to price increases.
He calculated that Three’s customer on the same contract would pay an estimated £86 extra for the phone over the next year.
For O2 and most Vodafone contracts, only the airtime portion of a contract is subject to inflation.
An average EE SIM-only customer would see a potential annual increase of £46.20, followed by O2 and Vodafone customers who would see annual price increases of £42.72 and £42.36 respectively. The average customer with Three would see the lowest annual increase of £25.20.
EE SIM customers would only face the highest exit fees of £295.36 if they wanted to leave a year early, followed by Vodafone and O2 customers at £287.88 and £237.08.
Three clients face the lowest exit fees of £169.59 for leaving their contract a year early.
Ofcom is currently investigating the mid-contract price increases and their fairness to consumers.
Rocío Concha, which one? director of policy and advocacy, said: “It is very worrying that many mobile customers could find themselves caught in a Catch-22 situation where they have to accept exorbitant – and difficult to justify – mid-contract price increases this spring or pay expensive Check out fees to leave your contract early and find a better deal.
“With many households struggling to make ends meet, it is completely unfair that people are stuck in this situation. Which? is asking suppliers to act quickly and reconsider any price increases. Companies should cancel 2023 increases for financially vulnerable consumers and allow all customers to leave without penalty if they face mid-contract price increases.”
An EE spokesperson said: “We strongly contest the investigative methodology used by Which? to compare SIM-only and phone plans to calculate inflation-related price increases. This figure was calculated using a SIM-only offer, when in fact we offer a limited number of plans where customers can pay their monthly phone and line rental separately.
While price increases are never welcome, we believe that this year’s increase, of around £1 a week for the average customer receiving the increase, reflects incredible value given the cost increases we are facing, the considerable investments that we are doing and, ultimately, the additional data that our customers consume on a month-to-month basis
Financially vulnerable clients are protected through our market leading social rates. Any customer concerned about paying their bills should contact us and we will help you find a solution that works for them.”