Mobile network operator Three UK has today followed BT, EE, Plusnet, Vodafone and TalkTalk by introducing a new pricing policy that aligns with Ofcom’s new guidance banning inflation-linked annual telecoms price rises (i.e. annual price increases will in the future be outlined in “pounds and pence”).
Just to recap. The market regulator recently banned annual price rises that are based off confusing inflation (CPI/RPI) or percentage-based changes (here). For example, this means that Three UK will need to phase out their existing policy, which states: “Each April, your monthly charge will increase by the previous December’s Consumer Price Index (CPI) rate, plus 3.9%.”
However, Ofcom’s change was never designed to stop mid-contract hikes completely (it’s more about making future pricing clearer and simpler), but it does at least require providers to tell customers precisely what any future price increases would be when they sign-up (“in pounds and pence“). This rules out changes to core subscription prices that are linked to unknown future inflation values or percentages.
Mobile operator Three UK intends to adopt this change for “new and upgrading customers” from September 2024 (existing customers will remain on the old policy until they upgrade or re-contract). In practical terms this means that annual prices (i.e. your core subscription price) will increase by between £1 and £1.50 a month each April, dependent on the data allowance of the contract (i.e. a bit fairer than the blanket approach adopted by others).
Price Hikes by Data Allowance
➤ 4GB or less: £1 more a month
➤ 5GB-99GB: £1.25 more a month
➤ 100GB or more: £1.50 more a month
In addition, Three’s 4G/5G based Home Broadband customers will also see annual rises capped at £2 a month per contract, which is below the £3 increases seen on some of the aforementioned fixed line broadband ISPs.
Elaine Carey, Chief Commercial Officer at Three UK, said:
“Like many mobile providers, we regularly review and revise our pricing to ensure that we remain competitive and reflect the cost pressures we face as a business. While we have always made sure annual price changes are clear and transparent to customers, we want to provide greater clarity going forward. Our unique tiered approach means any increase is fair, while ensuring our prices remain competitive.”
The fact that providers can now specify a specific rise ahead of time will of course do little to dampen calls for an outright ban on mid-contract hikes in favour of fixed term pricing, which is something we’d support. But it’s worth remembering that the new policy, which won’t be enforced by Ofcom until 17th January 2025, is only focused upon the core subscription price of a package (i.e. call charges and any paid add-ons may still adopt a different approach).
At the same time we shouldn’t forget that not all providers adopt the same approach as the biggest players. Quite a few smaller providers, particularly newer alternative broadband networks (altnets) in the fixed line space, often promote packages with simple fixed price terms.