Phone users grapple with ‘exorbitant’ price hikes and £400 exit charges

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Which? calls on providers to review price increases as consumers face cost-of-living crisis (Image: Getty Images/iStockphoto)

Mobile phone users face the choice of “exorbitant” mid-contract price rises or exit fees of more than £400, a consumer group has warned.

Which? is calling on providers to review price increases as consumers struggle with the ongoing cost of living crisis.

The agency wants customers to be able to leave their contract without penalty if charges rise mid-contract.

He also urged them to scrap 2023 inflationary increases for financially vulnerable consumers.

The big four mobile operators – EE, O2, Three and Vodafone – increase prices every April according to the Consumer Price Index (CPI) or Retail Price Index (RPI), plus an extra 3.9%.

EE, Three and Vodafone use CPI – leading to price rises of more than 14% this year, while O2 uses the higher RPI measure, meaning some customers will face increases of more than 17%.

As price increases are often implemented mid-contract, customers either have to accept them or pay exit fees to leave.

Price increases are higher for group contracts where the customer pays for both usage and the handset.

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People are ‘stuck’ on expensive phone contracts, which ones? claims (Image: Getty Images/iStockphoto)

Rocio Concha, Who? director of policy and advocacy, said: “It is extremely worrying that many mobile customers could find themselves caught in a Catch-22 situation where they either have to accept exorbitant – and difficult to justify – mid-contract price increases this spring or pay costly exit fees to leave their contract early and find a better deal.

“With many households struggling to make ends meet, it is completely unfair that people are trapped in this situation. Which? calls on providers to act quickly and review any price increases.

“Companies should scrap 2023 increases for financially vulnerable consumers and allow all customers to walk away without penalty if they face mid-contract price increases.”

Which? estimated that the average EE customer on a bundled contract would see an annual increase of £66.36, while the typical Three customer would see an increase of £56.40.

The same EE customer would face exit fees of £424.67 to leave a year early and the Three customer would have to pay £379.46 to leave their contract.

Additionally, using the example of an EE customer who took out a 36-month contract for an iPhone Pro Max with unlimited data, Which? estimated that the customer would pay an extra £105 for the handset next year due to price increases.

It was estimated that a Trio customer on the same contract would pay around £86 extra for the handset next year.

For O2 and most Vodafone contracts, only the airtime portion of a contract is subject to inflation.

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EE says it ‘vehemently denies’ data collected by Who? (Image: Getty Images/iStockphoto)

An average SIM-only customer with EE will see a potential annual increase of £46.20, followed by O2 and Vodafone customers who will see annual price rises of £42.72 and £42.36 respectively. The average customer with Three will see the lowest annual increase of £25.20.

EE SIM-only customers would face the highest exit fees of £295.36 if they wanted to leave a year early, followed by Vodafone and O2 customers at £287.88 and £237.08.

Three customers face the lowest exit fees of £169.59 for leaving their contract a year early.

An EU spokesman said: “We strongly object to the research methodology used by Which? to only compare SIM and handset plans to account for inflation-related price increases.

“This amount was calculated using a SIM-only offer, when in fact we offer a limited number of plans where customers can pay separately for the handset and monthly line rental.

“While price increases are never welcome, we believe this year’s increase, of around £1 per week for the average customer taking the rise, reflects incredible value given the cost increases we are facing, the significant investment we are making and ultimately the additional data consumed every month by our customers

“Financially vulnerable customers are protected through our market-leading social tariffs.

“Any customer concerned about paying their bills should contact us and we will help find a solution that works for them.”

Ofcom is currently investigating mid-contract price increases and their fairness to consumers.

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