Mobile phone users are faced with the choice of “exorbitant” mid-contract price increases or exit fees of upwards of £400, a consumer group has warned.
Which? is urging suppliers to reconsider price increases as consumers struggle with the ongoing cost of living crisis.
The organization wants customers to be able to terminate the contract without penalty if charges increase mid-contract.
It also urged them to cancel the 2023 inflationary increases for financially vulnerable consumers.
The ‘big four’ mobile companies – EE, O2, Three and Vodafone – raise prices every April according to the Consumer Price Index (CPI) or Retail Price Index (RPI), plus an additional 3 .9%.
EE, Three and Vodafone use CPI – leading to price increases of over 14% this year, while O2 uses the highest RPI measure, meaning some customers will face increases of more than 17%.
Since price increases are often applied mid-contract, customers have to either accept them or pay exit fees to leave.
Price increases are higher for bundled contracts when the customer pays for usage and for the device.
Rocio Concha, which one? director of policy and advocacy, said: ‘It is extremely concerning that many mobile customers could find themselves trapped in a Catch-22 situation where they have to either accept exorbitant – and difficult to justify – mid-contract price increases this spring or pay Expensive exit fees for leaving the contract early and finding a better deal.
“With so many families struggling to make ends meet, it is completely unfair for people to be trapped in this situation. Which? is urging suppliers to act quickly and reconsider any price increases.
‘Businesses should cancel 2023 increases for financially vulnerable consumers and allow all customers to leave without penalty if they face mid-contract price increases.’
Which? calculated that the average EE customer on a bundled contract would see an annual increase of £66.36, while the typical Three customer would see an increase of £56.40.
The same EE customer would face termination fees of £424.67 to leave a year earlier and the Three customer would need to pay £379.46 to terminate the contract.
Also, using the example of an EE customer who signed a 36-month contract for an iPhone Pro Max with unlimited data, Which? estimated that the customer would pay an additional £105 for the handset next year due to price increases.
He calculated that the Three customer on the same contract would pay around £86 more for the device next year.
For O2 and most Vodafone contracts, only the airtime part of a contract is subject to inflation.
An average SIM-only customer with EE would see a potential annual price 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 only customers would face the highest exit fees of £295.36 if they wanted to leave a year earlier, followed by Vodafone and O2 customers at £287.88 and £237.08.
Three customers face the lowest termination fees of £169.59 for terminating their contract a year early.
An EE spokesman said: ‘We strongly refute the research methodology used by Which? to compare SIM-only and handset plans to calculate inflation-related price increases.
‘This number was calculated using a SIM only deal, when in fact we offer a limited number of plans where customers can pay for their handset and monthly line rent separately.
‘While price increases are never welcome, we feel 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 experiencing, the considerable investments we are making and ultimately the additional data that is being consumed month to month by our customers
‘Financially vulnerable customers are protected through our market-leading social tariffs.
‘Any customers concerned about paying their bills should contact us and we’ll help them find a solution that works for them.’
Ofcom is currently investigating the mid-contract price increases and their fairness to consumers.
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