It looks like the public may be paying the price for simpler price rise formula even though in a fixed term contract. Plusnet has opted to adopt a price rise of £3 per month coming into effect at the end of March each year. This means if you sign up today to a £24.99/month part fibre service it will rise to £27.99/month next year and the following march it will be £30.99/month.
This is the same formula used by BT and EE, so no big surprise to see Plusnet follow suit. The £3 price rise is also being widely adopted by other retailers.
The downside to this is that while the CPI+3.9% needed people to dig out a calculator to work out their increase at the end of March 2024 the actual rise was smaller than what is planned for 2025. The 2024 price rises for Plusnet where 7.9% i.e. £1.97 if on a £24.99/month service the price rise for 2025 looks to be higher than if the old formula was retained i.e. £3 which is 12% versus the £1.97 at 7.9%. Since early 2024 inflation has dropped and the old formula using the current CPI would a 5.9% price rise i.e. £1.47.
For those on the higher price products e.g. Full Fibre 900 which Plusnet has on offer for £39.99/month at present, the new formula means a rise to £42.99/month on 31st March 2025 and £45.99/month in 2026. In percentage terms it is a more reasonable 7.5% price rise.
The widespread adoption of such large price rises increases the pressure on Ofcom to consider how price rises should be handled during minimum contract terms and to either say they are not allowed or that if there is a price rise customers are free to shop around at that point.
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Have these ISPs ever explained what added value a customer sees in return for year-on-year above inflation price rises?
Both Ofcom and the new government should be making the straightforward argument that these ongoing rises are themselves inflationary since they raise the price of a utility faster than other price indexes and likely the median and minimum wage, pensions and UC.
The comment above makes a fair amount of sense.
An increase of just CPI (i.e. CPI + Zero!) would be reasonable I think, but under the new rules I understand that’s not permissible.
I’d think that providers will need to be more proactive in offering retention deals for those out of contract in the future, otherwise there’ll be a fair amount of churn from disgruntled punters whose prices keep on ratcheted up year after year.
Will the base service prices for new customers also increase year on year? If some providers don’t follow the model there will quickly be a large price disparity and the big providers are likely to see more people moving to other companies. The last paragraph is key if Ofcom are going to take control of this.
None of this would be a problem if 12 month contracts was standard and we had a proper body who was not a puppet putting this sort of thing in place.
If a company wants to offer longer that should be fixed price for that whole term.
How they are allowed to get away with the current contracts is shocking you are forcing it on people because they are all at it.
@millerjones – “How they are allowed to get away with the current contracts is shocking you are forcing it on people because they are all at it.”
There are several providers who are not doing this, though you do need to shop around and be a wise consumer to work out who to go with if this is what you’re after.
And that is for part fibre, I agree with prlzx, what do people get for the increase in price? I know costs have increased for these providers, but some people will find it difficult to keep paying for these increases.