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Broadband and mobile giant BT (EE) has today announced that they’re following the UK government’s latest guidance, which requested that they “proactively move customers onto price changes with clear pounds and pence pricing amounts instead of inflation-linked rises“. But the risk is that this may result in some customers being hit by much bigger mid-contract price hikes in the future.
In case anybody has forgotten, there’s currently a growing storm circling around the policy that Ofcom introduced at the start of 2025. The change required telecoms providers to adopt a new approach to mid-contract price hikes, which did away with the old percentage and inflation-based model – replacing it with one that sets out such price hikes “clearly and up-front, in pounds and pence, when a customer signs up” (here). This made annual price hikes clearer and more transparent, but it also hit those who could least afford it with much bigger price hikes.
Most providers initially adapted to the new policy by following BT’s early example, which in 2024 – before the rules came into force – started setting out a new pricing policy that increased the monthly price broadband customers paid by a flat £3 extra from March or April each year (varying a bit between providers). Mobile providers often adopted the same approach, albeit usually via smaller increases.
However, a degree of controversy started to occur last year after BT (here) – followed by other providers (Vodafone, TalkTalk, Virgin Media etc.) – then increased the amount of their mid-contract hikes from £3 to £4, which seemed at least partly intended to reflect the fact that inflation had remained higher than originally forecast. But BT and most other providers only applied this to new customers (as well as some re-contracting subscribers).
One of the reasons why this approach has become so unpopular, despite the noted improvement in pricing transparency, is because it deliberately hits those who can least afford it the hardest For example, somebody on a cheaper plan, paying say c.£20 per month, gets hit with the same £4 rise in April every year as those on the most expensive packages, which could be paying £50-£70 or so per month. The change doesn’t scale, so people with cheaper plans are penalised.
Government intervention
The Government did initially appear to be taking a tougher line over all this (here), which occurred after O2 took the unusual approach of forcing their recent over-inflation hike in mid-contract pricing on to existing customers (here). Initially, the government seemed to hint that Ofcom should consider stopping the practice, only to later retreat by saying they had “no plans to ban in-contract price rises” (here).
Adding to the feeling of the government being tone-deaf on the issue, they then called on telecoms operators to “take proactive steps to move legacy customers onto the pounds and pence approach for price communications“. This is despite what we’ve just said above about the reality that, for some consumers, the old CPI + X% policy will actually be resulting in customers paying lower mid-contract hikes than the new pounds and pence one.
Extract from the Government’s Letter to Industry
The commitments that industry has made through the Digital Inclusion Action Plan, and wider efforts, such as the provision of the lower cost social tariffs are vital in supporting vulnerable and digitally excluded consumers. However, it is clear that more needs to be done to protect all consumers. Ordinary people should feel empowered when engaging with the sector and confident they are getting a good deal.
We are asking you to reinforce your commitment to treating customers fairly, including by confirming customers under contract will not face price rises beyond those that they signed up to. We would also like you to take proactive steps to move legacy customers onto the pounds and pence approach for price communications with no impact on the timing of planned price increases.
In a new blog post today, BT has confirmed that they’re “very supportive of the Government’s call” and “will begin moving those customers who contracted with us before we introduced our pounds and pence approach onto these terms as part of our price change this year“. Once again, there’s lots of focus on the transparency benefits, albeit without much consideration for the negatives of Ofcom’s required policy.
BT’s Statement
We have listened and will begin moving those customers who contracted with us before we introduced our pounds and pence approach onto these terms as part of our price change this year. This change means all our customers will benefit from a transparent approach to pricing, aligned with Ofcom and Government priorities.
We will be initiating our 2026 price change for these out of contract customers from 1st March. The date when this price change will apply will be confirmed in each customer’s price change notification.
To be clear these customers moving to pounds and pence terms are outside of the minimum term of their contract with us and will not be entered into a new minimum term contract. We are also not adjusting the annual price change for customers within the minimum term of their contract, something that has been heavily scrutinised recently.
We will be contacting customers in the coming weeks with specific information relating to their pricing.
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