BT and EE annual increase of RPI +3.9%

[Xenophon PCDGS]

Has anyone on the website heard of any recent discussions on that matter?

 

[ainsworth74]

Well I had an internal discussion between myself and myself during which I swore profusely at the money grabbing gits who feel like they can just whack 3.9% on for no apparent reason. An inflationary increase? Fine. They're costs are impacted by inflation just as everyone else. 1% even maybe, they're investing in infrastructure and whatnot. But RPI and 3.9%? That feels like a mickey take.

 

[Ostrich]

I've had a letter today from BT confirming a rise of CPI + 3.9%, which in my case works out at just under £6/month.

I've also had an email from a mobile phone provider (I won't name to save their blushes) telling me the increase was going to be just 4.9%, rapidly followed by an "Oops, sorry, we made a mistake" retraction!

 

[Shaw S Hunter]

Well I had an internal discussion between myself and myself during which I swore profusely at the money grabbing gits who feel like they can just whack 3.9% on for no apparent reason. An inflationary increase? Fine. They're costs are impacted by inflation just as everyone else. 1% even maybe, they're investing in infrastructure and whatnot. But RPI and 3.9%? That feels like a mickey take.

It may well feel like a mickey take but it's effectively a policy that's been laid down by Ofcom. I think it came in at the same time as comms providers were forced to become more transparent with how their bundling options were priced. Doubtless the money grabbing gits actively lobbied for the 3.9% figure but it's Ofcom who implemented it. IOW if you're slinging mud make sure to aim some at all those deserving of it.

 

[Kite159]

And no doubt if the telecom companies don't put up their prices by CPI+3.9% (i.e. CPI+1%) some people will try and use it as a way to exit the contract penalty free.

Blame is solely with Ofcom, they wanted contracts to have those sort of rises built in so customers knew that prices would increase on a particular date. Didn't I read somewhere they were looking into forcing those companies to change it from a percentage to an actual amount (i.e. "Price will rise £2 a month on the 1st April". Best thing they can probably do is ban mid-contract price increases, especially as some mobile contracts are 3 years. Always makes me laugh with the emails when the "we are increasing your price" with what 'benefits' they have to try and soften the blow (although not like the letters my employer sends out when it comes to wage rises for the Mininum wage staff which make it sounds like they want to give you a pay rise after a 'review' rather than being forced to give that pay rise)

 

[ainsworth74]

It may well feel like a mickey take but it's effectively a policy that's been laid down by Ofcom. I think it came in at the same time as comms providers were forced to become more transparent with how their bundling options were priced. Doubtless the money grabbing gits actively lobbied for the 3.9% figure but it's Ofcom who implemented it. IOW if you're slinging mud make sure to aim some at all those deserving of it.

I shall adjust my ire accordingly!

 

[jon0844]

BT/EE has announced it has scrapped the CPI+3.9% system, but - funnily enough - it won't stop this year's increase. They'll be changing the method after April.

 

[Xenophon PCDGS]

BT/EE has announced it has scrapped the CPI+3.9% system, but - funnily enough - it won't stop this year's increase. They'll be changing the method after April.

I think the March 2023 BT price increase was really a total increase of around the 14% mark, as the RPI calculation itself was in double figures.

 

[sprunt]

Did Ofcom mandate these charges, or did they simply impose a requirement for the providers to be transparent about them?

 

[Stephen42]

Did Ofcom mandate these charges, or did they simply impose a requirement for the providers to be transparent about them?

Ofcom does not have the power to regulate the charges (or level of price increases) to consumers/small businesses unless a single provider has a significant influence on the overall market. Their powers include enforcing standard consumer law in the sector, which doesn't cap/bar these types of rises and protecting interests of consumers. Where protecting interests of consumers they need to consider the proportionality of their actions, it is a free and open market which they shouldn't restrict unless it's required to prevent harm to consumers.

BT introduced the first CPI + 3.9% increase in late 2020, most other providers then independently followed suit using similar rates or in some cases higher with RPI as the inflation index. Without a clause in the contract providers have to use the 'prices may vary' terms which allow any negative impact on a consumer that they can leave penalty free which adds risk to the provider on trying to increase prices mid contract. Ofcom goes beyond standard consumer protection law in what information needs to be provided around mid-contract price increases, including the need for a worked example with the most recent inflation rate.

With few providers not having these terms, Ofcom's view is that it limits consumer choice and consumer understanding of the clauses is low partially as the level of increase is unknown at time of agreeing. They have an ongoing consultation for amendments to their code that inflation linked rises are not clear enough with compliant mid-contract price rises in future needing to be specified in pounds and pence at time of the consumer entering the contract. Again, they don't restrict what those rises are as that's not within their remit, just that the consumer is suitably informed and not stung by unexpected rises.

 

[jfollows]

It's tedious, isn't it?
I pay £8/month for my SIM-only monthly contract.
Well, that's to say that every year it goes up (to £8.70 in June) and every other year I get fed up and get a new contract.
I actually had 4 years with Plusnet because I got a new contract with them after 2 years.
Last year I switched to O2, in part because their global roaming plan was better for me in 2023. Also because Plusnet ditched me!
Next year I'll probably switch again, to someone else with an £8/month plan.
Each time I get a bigger data allowance, but it's always been more than I needed anyway. It's 20GB/month now, but I probably use <1GB/month.
I'll probably pay the £8.70 for the next 12 months, because the extra £8.40 I don't care about, but next year I'll be more motivated and annoyed to change again.

EDIT Actually I decided to switch now, I have changed to a new contract with O2 for £8/month with 32GB of data a month (which I don't need) but it's cheaper than remaining on the £8.70 contract with 20GB/month than I would otherwise have been on.

 

[nw1]

On a related matter, how do BT get away with charging you more than the total cost of the (land) line rental and bill?

In my case they are already charging a very expensive £30 line rental per month. In addition to that, in the last bill period I made £16 worth of calls.

So why are they charging me £51 per month?

 

[75A]

They ara a PLC, therefore have Shareholders who expect Dividends.

 

[nw1]

They ara a PLC, therefore have Shareholders who expect Dividends.

So that justifies them billing a customer for more than the cost of the line rental and calls then?

 

[jon0844]

Did Ofcom mandate these charges, or did they simply impose a requirement for the providers to be transparent about them?

My understanding was that Ofcom allowed networks to increase charges beyond inflation (hence the 3.9% that every network magically settled on, possibly thinking 4% was taking the ****) IF they agreed to offer 'social tariffs' to poorer users - tariffs that, in theory, would cost networks money and so needed to be subsidised. I have no idea if the social tariffs were loss making, but I doubt it.

The networks agreed but then pretty much failed to advertise or promote those plans, but obviously all agreed to charge CPI+3.9% - even networks like Three that had a whole marketing campaign about NOT increasing charges mid-contract, but then when management changed did a total U-turn. Easy money I guess.

 

[CC 72100]

The networks agreed but then pretty much failed to advertise or promote those plans, but obviously all agreed to charge CPI+3.9% - even networks like Three that had a whole marketing campaign about NOT increasing charges mid-contract, but then when management changed did a total U-turn. Easy money I guess.

Just like when Three categorically stated that they wouldn't be bumping people off plans when EU roaming was withdrawn, and then very shortly after saying that they had been reviewing their product offer and decided they were withdrawing the legacy plans including EU roaming as part of their normal product review procedures.

Surrrrrre.

 

[75A]

So that justifies them billing a customer for more than the cost of the line rental and calls then

No-one forced you to use them, did they?
The day I retired I changed to a different ( and much faster supplier )

 

[jon0844]

No-one forced you to use them, did they?

I think the big issue is that despite competition, every network eventually settled on the same 3.9% increase.

What's silly is that on Vodafone, if you connect to a VOXI plan (VOXI is just Vodafone but with custom plans - it's not even really a MVNO) there's no increase. Giffgaff vs O2, no increase. 1p Mobile vs EE, no increase and many other examples.

Yet a lot of people buy their phone or SIM on the high street and while I wouldn't say get ripped off, they do invariably end up paying more than they have to.. and I'm talking about SIM only more than a handset tariff, which opens up another can of worms because of how some contracts work (and how the increase applies to the whole plan - phone and tariff, or just the tariff portion).

Does Ofcom regulate the industry well? No.

 

[JonathanH]

To be fair, the annual increase of CPI plus 3.9% was put in place at a time when annual increases in CPI weren't expected to be as high as they have been since. The Bank of England is supposed to keep CPI at 2% a year, and take whatever action is required to keep it there.

Increases of 6% would be broadly reasonable in a scenario where inflation is at 2%, and people signed contracts on that basis. Other providers are available, and anyone who signed up for a contract in 2021 will typically now be outside the period when that contract can't be truncated.

 

[jon0844]

I don't have a real issue with increasing prices in line with inflation, it's the 3.9% bit on top that grates - including how we reached that figure, and every network followed.

If it was just RPI or CPI then fine.

Another argument was that it was to cover the cost of investing in 5G, but the networks should be able to fund their network (and upkeep and maintenance) from the contracts. If they're pricing too low to be able to operate, they need to increase prices - you'd think.

 

[Mojo]

My ISP (Shell Energy) is making out how great they are for only increasing their rates by 6% this year. Apparently the Ts&Cs allow them to increase by CPI+3% so I should be grateful to them that its only 2% above CPI. Still feel it's very cheeky that they can increase the price within a fixed period, and also that I'm not allowed to cancel. Many other such sectors don't change the rates during a fixed contract period.

Most annoying, is Community Fibre launched on my street just a few weeks after I'd signed the 18 Month contract with Shell Energy!

 

[Xenophon PCDGS]

Matters such as this will go down like the proverbial lead balloon in the fiscal planning section of the Bank of England who still hope for inflation to be a 2% figure.

 

[Yew]

If all the companies do the same thing, and put their prices up by the same amount, what is the point of having all the companies. My understanding from proponents of the free-market is that it is supposed to bring around competition to provide the best price and services. However, much like when oil prices dropped sharply, and petrol prices didn't, it seems like there is no motivation for these organisations to be the competitive one, and instead try and exploit the market as much as possible.

 

[jfollows]

If all the companies do the same thing, and put their prices up by the same amount, what is the point of having all the companies. My understanding from proponents of the free-market is that it is supposed to bring around competition to provide the best price and services. However, much like when oil prices dropped sharply, and petrol prices didn't, it seems like there is no motivation for these organisations to be the competitive one, and instead try and exploit the market as much as possible.

It’s counteracted by prices to new customers, and to existing customers who won’t accept the price rises and move instead, in a market in which the cost to the service provider for the same thing goes down every year.
As I said above, I still pay £8/month and get more for my money, going back 10+ years, but I have to be a faithless customer and make an effort in order to do so. I used to get 3GB per month for my £8, now I get 32GB/month for the same £8, less in real terms.

 

[nw1]

No-one forced you to use them, did they?
The day I retired I changed to a different ( and much faster supplier )

Why are you apparently trying to defend them? Just curious.

Don't you think that it's morally wrong (though apparently not illegal) to be charged more than the cost of the line rental and the calls?

 

[jfollows]

The free market penalises those who think that loyalty to a particular supplier is rewarded.

 

[nw1]

The free market penalises those who think that loyalty to a particular supplier is rewarded.

True, and I think what the free-marketeers fail to realise is that not all of us have got time to spend faffing around with changing suppliers, which (presumably) brings with it the risk of losing home internet for a period - which could be a seriously big deal.

 

[jfollows]

True, and I think what the free-marketeers fail to realise is that not all of us have got time to spend faffing around with changing suppliers, which (presumably) brings with it the risk of losing home internet for a period - which could be a seriously big deal.

For home internet, I agree with you, I have been with BT since 2000 and I do not trust an alternative supplier to provide the same service, but I pay a premium for this I am sure. Mobile service I switch all the time.

 

[gswindale]

I'm at the point where I'm seriously in 2 minds about switching home broadband provider, but it isn't the potential loss of service I'm concerned about - more the length of time to reconfigure devices to work with the new router if the new provider locks it down.

I am seriously tempted to move to one of the City fibre based services and drop the landline as the last call on it was over 2 months ago, but I'd still like to keep my exisiting WiFi network as is and am not convinced that is possible (we have a BT Home hub and wi-fi disc to provide a mostly decent signal throughout the house & garden).

 

[Yew]

The free market penalises those who think that loyalty to a particular supplier is rewarded.

If loyalty to a supplier is not rewarded, why have multiple suppliers?