The federal government has requested the media regulator to revisit its guidelines on telephone corporations elevating their costs in the course of a contract, after O2 unexpectedly introduced it was elevating costs by £2.50 a month.
Expertise Secretary Liz Kendall mentioned O2’s greater than anticipated worth improve is “disappointing given the present pressures on shoppers”.
“I imagine we have to go additional, quicker. I’m eager that we have a look at in-contract worth rises once more,” she wrote in a letter to the media regulator.
Ofcom mentioned it shared the federal government’s concern “prospects who face worth rises should be handled pretty by cell suppliers”.
O2 mentioned in an announcement: “We recognize that worth adjustments are by no means welcome, however we have now been totally clear with our prospects about this modification, writing on to them and offering the precise to exit with out penalty if they need.”
Ofcom has been given till 7 November to reply to Ms Kendall’s letter, and mentioned it could reply to her particular questions shortly.
In January, new rules came in which cracked down on telephone and broadband suppliers rising costs in the course of a contract with out warning.
Nevertheless, final week O2 introduced it could be raising its monthly prices by more than originally promised.
It was in a position to do that as a result of the rise was not linked to inflation, and it has given prospects 30 days to depart with out penalty – as long as they repay the price of their system in full.
The corporate mentioned it has not gone towards the regulation and Ofcom’s guidelines don’t cease suppliers from elevating costs.
“A worth improve equal to 8p per day is drastically outweighed by the £700m we make investments every year into our cell community, with UK shoppers benefitting from a particularly aggressive market and among the lowest costs in comparison with worldwide friends,” it mentioned.
Ms Kendall mentioned O2 went “towards the spirit” of the foundations in her letter to Ofcom’s chief government Dame Melanie Dawes.
She has requested Ofcom to look into whether or not the 30-day switching interval makes it simple sufficient for shoppers to maneuver to a different supplier.
“I might welcome your enterprise a speedy overview on how simple it’s for purchasers to change suppliers,” she mentioned.
“If corporations are decided to extend pricing, it’s beholden on us to be sure that prospects are capable of go elsewhere as simply as attainable.”
She has additionally requested for an evaluation into whether or not the January guidelines give shoppers sufficient transparency into worth rises throughout their contracts.
Ofcom’s guidelines require corporations to inform prospects how a lot their payments will rise by in kilos and pence earlier than their contract begins.
O2 initially mentioned its month-to-month costs would improve by £1.80 a month in April 2026 for present prospects.
However the agency now says they may go up by £2.50 as an alternative.
Ms Kendall mentioned she needs telephone suppliers to tell all their prospects – together with these whose contracts began earlier than the brand new guidelines – how a lot their month-to-month costs will go up by.
“We have at all times mentioned fastened ought to imply fastened,” mentioned Tom MacInnes, director of coverage on the Residents Recommendation charity, and added the present rule “hasn’t gone far sufficient to guard prospects”.
“If one firm is ready to get away with this, different suppliers may comply with go well with,” he mentioned.
“The time has come for the regulator to banish mid-contract worth rises for good.”
In the meantime, telecoms analyst Paolo Pescatore of PP Foresight mentioned UK community operators are “cash-strapped as margins are being squeezed”.
He added: “Hanging the precise steadiness between elevating much-needed funds and investing in next-generation networks is rarely simple.”
However he mentioned whereas different suppliers would have often adopted in saying comparable costs rises, “it appears extremely unlikely that rivals will comply with go well with, given the buyer backlash and consciousness generated to this point”.
