The news last week that O2 was changing its annual price rise from £1.80 each April to £2.50 each April continues to create headlines. This is because it comes at a time when people are suffering price shock each week when shopping for food and therefore are more sensitive to other fixed costs going up in price too, when for many salaries are not increasing substantially.
The rules around price rises that Ofcom introduced previously were created mainly so that people could easily without reverting to a calculator see what their costs would be in 12 or 24 months time on a long contract, plus inflation was changing rapidly. Alas while knowing about future price rises is easier, i.e. sign-up today for a £30/month service, in April 2026 this will rise to £33.50/month and in April 2027 this will rise to £37/month, the actual price rises are invariably inflation busting. Perversely the impact of fixed price rises is proportionally higher on the entry level products since £3.50/month on a £24/month service hits harder than someone who can already afford a £49.99/month premium package.
The change from O2 seemed simple enough, rather than a £1.80 increase each April it will now be a £2.50 increase for voice customers. Where it differs compared to some others that got less attention is that it applies to existing and new customer contracts.
Ofcom rules mean that as this applies to existing customers that you can exercise your right to break a contract, and move to another provider or change your plan with the existing service. This is because the provider is changing the price during your contract and the price rise is different to what was previously announced.
Other mobile and broadband firms have changed the annual price increase amount, and almost always the change is an increase in rise each April. The difference is that it has usually only applied to new customers and those outside a fixed term contract.
Ofcom has issued a statement, making it clear O2 has not broken any rules, but the public is probably going to contend that O2 is not treating customers fairly.
“We want customers to have certainty about their monthly mobile bills so they can plan their household budgets. That’s why earlier this year we banned unpredictable price rises linked to inflation and instead required providers to tell customers upfront in pounds and pence about any increases in their contract.
We are disappointed by O2’s decision. This goes against the spirit of our rules which are designed to ensure greater certainty and transparency for customers when they sign up.
Today, we’ve written to the major mobile companies reminding them of their obligations to treat customers fairly. We encourage any customer who wants to avoid these price rises to exercise their right to exit without penalty and sign up to a new deal”
Ofcom statement on O2 price rises
We think that while it is the case providers do not use CPI or RPI in the public facing price rise, the fact that O2 has changed the price rise for in contract customers is them introducing an unpredictable price rise. The rules do allow this, but as Ofcom recognises this does break the spirit of the rules. The worry here is how far can providers push the rule before Ofcom acts.
ISPreview obtained a statement from O2 that suggests the price rise is linked to investment the mobile operator is making, rather than other costs incurred by the network changing.
“As acknowledged by Ofcom in its letter to providers, its rules do not prevent companies from increasing annual price changes – for example, to invest in improving networks. The changes we have announced in no way breach any regulatory rules.
We appreciate that price changes are never welcome, but demand for mobile connectivity is greater than ever, and any price change customers see on their bills is greatly outweighed by the £700m we invest each year into our mobile network to meet this growing demand. We have written directly to customers about this change, and they are able to exit without penalty if they wish.”
O2 spokesperson
The question is how many O2 mobile customers will see that statement and go oh the price rise is fine and dandy as I am happy to pay for more mobile masts where I don’t live.
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Quite strongly worded for a usually tolerant regulator to suggest that customers move on.
And quite weasel words from O2 about paying for investment. Usually investors pay for investment and make their money from the return on that investment. Across 24 million customers the price rise is over 1 billion per year. So that is the investment paid off in 9 months and that £700 million is returning 1 billion every year thereafter. In fact they don’t need investors to stump up an investment, they can just pay as they go from the price rise and shovel the rest of the money into the shareholders’ pockets
I do not understand why there is any suggestion of controversy.
Inflation is higher this year than it was in 2024. The government has imposed, and plans to impose, increased costs on businesses through legislation, while customers are starting to benefit from improved services.
Perhaps the controversy stems from those who expect a free ride and believe everything should be subsidised from tax revenues.
Re:”Perhaps the controversy stems from those who expect a free ride and believe everything should be subsidised from tax revenues.”
Absolutely that is not where the controversy is coming from.
The controversy is entirely due to those who expect a free ride.
Nah, the controversy is coming from O2 promising one thing, then doing another.
Read your T&Cs.
In my case, the controversy stems from having been told year after year “be patient, we will be improving coverage” and still home is a not zone. They’ve been taking subs on this empty claimvfor years and respond to complaints with silence.
It is simple; rather than moaning to others, just take your business elsewhere.
Well, I simply moved on to another network (an O2 MOVNO) and halved my costs for an equivalent contract. If you don’t like it, just move.
My contract was about to expire anyway. After 24 months, the pricing was already uncompetitive. It took just 3 texts to arrange my number port, which was done by lunchtime, 2 days after I set up the new contract with my new provider.
O2’s PAC code text service and website were both failing on the day I received their price rise email. Naturally, the customer service lines were also inundated. Happily, their website reappeared the following day and I was able to switch to a service withe double the data for what I was currently paying.