Broadband and Mobile Customers in for Tough Inflation-Linked Price Hikes

January’s official inflation figures are bad news for millions of broadband and mobile customers, who now face price hikes of more than 9% this spring.

Over the last couple of years, many telecoms providers have written annual inflation-linked price hikes into their contracts, arguing that they were more predictable and fair to consumers.

These prices hikes were manageable when inflation fell between 0.5% and 2%, as it did in 2020 and early 2021. But inflation has been steadily climbing since last summer due to surging global energy prices, supply chain disruption, and labour shortages.

December’s consumer price index (CPI), announced earlier this week, hit 5.4%, its highest level in 30 years. The retail prices index (RPI) for December is even higher, at 7.5%. Those figures spell sky-high price hikes on our broadband and mobile bills this spring. 

Because these price hikes were written into your plan's terms and conditions—under the formula CPI/RPI + a fixed percentage—you won’t be protected by Ofcom’s rules against mid-contract price hikes. That means you can’t duck out of your contract without facing early termination fees. 

The BT Group—which includes broadband providers BT, Plusnet, and EE Broadband and mobile network EE—will hike prices on 31 March 2022 by December’s CPI (5.4%) plus 3.9%. That means your bills will be 9.3% higher than you were previously paying—a steeper price hike than the 4.5% hike BT brands handed down last year.

BT defended the price hikes as “a necessary part of business.” The price increases will allow BT to “keep up with the rising costs we face and ensure we can continue to deliver a brilliant network experience as customers usage of data grows month on month,” said Nick Lane, BT’s MD of Consumer Customer Services.

Lane highlighted costs faced by BT’s networks as they handle more traffic (broadband data usage is up 90% since 2018, while mobile traffic is up 79% since 2019) and its transition to using 100% renewable electricity. He also pointed to ongoing network upgrades, including the rollout of full-fibre and EE’s 5G network. 

BT said the average consumer will see their monthly bills rise by £3.50—or £42 across the year. BT noted that customers on its social tariffs BT Home Essentials, BT Home Phone Saver, and BT Basic won’t see their prices changes.

Mobile operator and broadband provider Vodafone uses the same December CPI + 3.9% formula, so its subscribers will also see 9.3% price hikes, to take effect on 1 April 2022.

A Vodafone spokesperson said: “These annual price increases are essential for us to maintain investment in our network and services while the costs that we face continue to rise."

TalkTalk will hike prices on 1 April by December’s CPI (5.4%) + 3.7%. So expect your broadband bill from TalkTalk to be 9.1% higher in April. Customers who signed up to Fixed Price Plus tariff and “vulnerable” customers such as pensioners and people with disabilities won’t be affected, TalkTalk said.

Shell Energy Broadband, which in October scrapped its pledge of no price hikes, will increase prices on 1 April by December’s CPI + 3%, or 8.4%.

Meanwhile, O2 customers will be in suspense for a little longer. The mobile operator will hike prices this spring by the February RPI, which will be announced in March.

Meanwhile, O2 partner Virgin Media has stuck with a static annual price hike for its broadband plans. This year, that will mean customers see their bills rise by an average of £4.70 from March.

Sky and Three also haven’t adopted inflation-linked formulas for annual price hikes but may still hand down price increases this year.

Meanwhile, Hull-area broadband provider KCOM has cancelled its planned price hike, which would have pushed up prices by December’s CPI + 3.9% (or 9.3%) in March. KCOM managing director John Rooney said the provider didn’t want to “add to the burden of rising costs that we are experiencing in everything from our utility bills to our shopping baskets.”