On 17th January 2025 Ofcom will begin enforcing a ban on mid-contract price hikes that are linked to inflation and percentage changes (here), but this doesn’t extend to many existing broadband contracts. Consumers on bigger ISPs may thus find themselves being divided between two different pricing policies, and one is going to hurt your wallet more than the other.
Just to recap. Over the past few years most of the major ISPs have adopted a policy that sees them increasing the price their customers pay, each year, by around 4% plus the rate of annual inflation (CPI or RPI) – as published in a particular month (usually January or February) and then introduced to bills in March or April. In 2022 this resulted in average annual price hikes of around 9% (here), before rising to 14% in 2023 (here) and falling back to 7-8% in early 2024 (here).
However, many consumers found the policy confusing (e.g. a lot of people are not familiar with how “inflation” actually works or the meaning of terms like CPI or RPI), which resulted in Ofcom deciding to ban the practice. But this was more about forcing broadband, phone, pay TV and mobile providers to be more transparent, rather than completely stopping mid-contract price hikes.
Instead, the regulator told providers that, wherever they apply in-contract price rises, they must now “set these out clearly and up-front, in pounds and pence, when a customer signs up“.
Old vs New Approach to Mid-Contract Price Rises (Ofcom)
Since then the industry has partly responded in much the same way as it always does, by waiting to see what approach BT took (here) and then copying it. BT’s response was to introduce a flat £3 per year increase on broadband and a £1.50 increase on mobile. Such a policy is clearer, but it doesn’t scale well (i.e. those on lower priced entry-level services will be hit harder) and is thus unlikely to damped calls for an outright ban on mid-contract hikes.
The other caveat in all this is that the change usually only impacts re-contracting and new customers who join after the new pricing policy has been introduced (although some O2 are pushing it on to existing customers too – here). Put another way, existing customers will often still be held to the old inflationary-linked policies, until they upgrade/re-contract or switch provider. But this begs the question – given the recent falls in inflation, which approach will hit your pocket the most? Let’s take a look.
Comparing the Impact
In order to run this quick and admittedly over-simplified comparison between the old and new pricing policies, ISPreview has opted to use an example monthly price of £30. The examples we’re using below will mostly reflect major ISPs (and some random picks) that have, at the time of writing, clearly set out what their approach to mid-contract price rises will be post-17th January 2025. Some other providers may not announce this until that date.
In addition, we’re going to take the latest inflation figures, as published in November 2024, to help us get as close as possible to how we expect the old pricing policy (if it were to be continued into 2025) would compare with the new ones if it were applied in 2025. The results for our example broadband package are as follows. Remember, most of these annual-price hike policies are usually applied to bills around March or April.
Impact of Old (2024) vs New (2025) Price Hike Policies
(Broadband Packages)
BT
Previous Policy: CPI of 2.3% + 3.9% = 6.2%
New Policy: £3 per month extra
Result: A package costing £30 per month would, from introduction, now cost £33 per month (new policy) vs £31.86 (old policy).
Previous Policy: CPI of 2.3% + 3.9% = 6.2%
New Policy: £3 per month extra
Result: A package costing £30 per month would, from introduction, now cost £33 per month (new policy) vs £31.86 (old policy). This is identical to BT.
Previous Policy: CPI of 2.3% + 3.7% = 6%
New Policy: £3 per month extra
Result: A package costing £30 per month would, from introduction, now cost £33 per month (new policy) vs £31.80 (old policy).
Previous Policy: RPI of 3.4% + 3.9% = 7.3%
New Policy: £3.50 per month extra
Result: A package costing £30 per month would, from introduction, now cost £33.50 per month (new policy) vs £32.19 (old policy).
Previous Policy: Sky doesn’t have a set policy and increased prices by an average of 6.7% in 2024, which was not directly CPI/RPI linked.
New Policy: We don’t currently know how they plan to handle future changes for either existing or new customers.
CommunityFibre
Previous Policy: CPI of 2.3% + 2.9% = 5.2%
New Policy: £2 per month extra
Result: A package costing £30 per month would, from introduction, now cost £32 per month (new policy) vs £31.56 (old policy).
Broadly speaking, the old policy, if it were to be maintained into 2025 (usually impacting existing customers), would result in an annual increase in rental prices of between 5.2% to 7.3% (£1.56 to £2.19) extra per month on a package costing £30 per month. By comparison the new policy, on the same £30 package, results in an annual increase of between £2 to £3.50 extra per month (between 6.25% to 10.45% extra).
Clearly, most broadband consumers (i.e. those using the biggest ISPs) are going to pay more this year under the new, and admittedly clearer, pricing policy than the old one. In addition, those on the cheapest packages will suffer an even more disproportionate hit. But in fairness, some providers, like CommunityFibre, have chosen a smaller c.£2 increase that sits closer to the older policy in terms of its impact.
The comparative impact of this will of course vary a little depending upon the final CPI/RPI figures, while the chosen £ increase under the new policy could be said to reflect each provider’s attempt to de-risk the uncertainty around future inflation values when setting their pricing (i.e. Ofcom’s pursuit of greater clarity has come at a cost). Providers may yet choose to set a different £ increase for 2026 and beyond, so the gap between pricing policies could change in the future.
Otherwise, it’s worth highlighting that not all communication providers play the mid-contract hikes game. A good number of ISPs, particularly smaller players and many alternative networks, often adopt much more static pricing that rarely changes or at least won’t change during your minimum contract term.
Finally, it’s worth remembering that broadband providers are NOT immune to cost increases. Providers, much like consumers, are also suffering under the burden of rising supplier and lease costs, surging inflation, high energy prices, as well as the cost of adding all sorts of new services (e.g. FTTP) and catering for new regulations etc.
Consumer who are hit by mid-contract hikes like this could alternatively try haggling for a lower price when the notification drops (Retentions – Tips for Cutting Your Broadband Bill), although your mileage may vary (big providers will be more receptive). Meanwhile, those on benefits (Universal Credit etc.) also have the option of taking a cheaper Social Tariff – see our Quick Guide to UK Social Tariffs.
In addition, Ofcom’s new One Touch Switching (OTS) system has also made it much quicker and easier to switch providers, but just make sure you aren’t going to be penalised by any early contract termination or exit fees before doing so (this should not be an issue if you’re already out of contract).