Market Watch

Unraveling Inflation-Linked Telecom Hikes: Informative Breakdown

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A significant increase in mobile and broadband prices for numerous customers is anticipated this April. This is according to research conducted by the trusted consumer advocacy group, Which?. The study divulges that the forthcoming price hikes could be potentially avoided by paying hefty fees to cancel the contract. As part of their ongoing campaign to ensure customers have financial clarity, Which? has extensively studied the mobile industry market data.

Primarily, the consumer champions discovered that major mobile providers, EE, Three, and Vodafone are all set to boost prices by 7.9% this year. These increases, based on CPI (Consumer Prices Index), are projected to cost consumers an extra £27.36 annually.

Simultaneously, broadband users are not exempt from the price surge either. According to the findings, the typical BT consumer is expected to see the largest hike, with an upsurge of 7.9% increasing their bills by approximately £35.92 each year.

The consumer advocacy organization strongly criticizes these developments stating, “We think it is unconscionable that broadband and mobile providers are still planning to go ahead with this year’s inflation-linked price rises, which will impact millions of people, even after the regulator declared this practice causes substantial consumer harm and proposed a ban.” Which? Director of Policy and Advocacy, Rocio Concha, echoed these sentiments, terming the situation as “outrageous”. She emphatically urges providers to act ethically, calling for an immediate cessation of such unjust practices.

In an effort to promote pricing transparency, Ofcom, the telecommunications regulator, proposed a prohibition on mid-contract price increases anchored to inflation, just last year. Shockingly, despite the proposal, few customers are aware of what these inflation-linked price rises imply. As many as 55% of broadband users and 58% of monthly mobile subscribers have limited knowledge of how inflation indices like CPI and RPI (Retail Prices Index) work, thus, impeding their comprehension of how price hikes are computed.

Ofcom had voiced concerns over these tactics, stating that the annual increases create “substantial amounts of consumer harm”. In light of these assessments, Ofcom proposed the new rule. A period of consultation is currently unfolding, with the results expected to be divulged this Spring.

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