The company has assured customers that the price increases will only amount to “the price of a takeaway coffee per month”
Following a recent Ofcom crackdown on broadband advertising and mid-contract price hikes, BT have confirmed that they will be adopting a simpler approach to their pricing models, starting from this summer.
“Starting in early summer, we will introduce a pricing model consistent with Ofcom’s approach, moving away from % figures and CPI, and offering instead, a clear and simple view of any changes in “pounds and pence,” read the press release.
For broadband customers the increase is expected to be around £3 per month, and mobile customers around £1.50, although this will only occur after the company’s next price hike.
The pricing model currently used by BT adjusts the customer prices on 31st March every year by the rate of inflation (CPI) plus 3.9%. Advertising prices that are linked to inflation rates can often be confusing for consumers because an exact increase amount is not advertised; instead, only a percentage increase and esoteric inflation metric is shown. Ofcom found that over 55% of broadband customers and 58% of monthly paying mobile customers did not know what inflation rates like CPI and RPI measure.
Additionally, consumers have grown angry with the size of mid-contract price rises – BT’s increase last year totalled 14.4%, for example.
Research conducted by Ofcom found that four in ten (11 million) broadband customers and over half of mobile customers (36 million) were on contracts subject to inflation-linked price rises (as of April 2023).
“Most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around,” said Ofcom CEO Dame Melanie Dawes.
In mid-December, Ofcom proposed a ban on these inflation-linked mid-contract price rises and have been conducting a consultation that is set to end on 13th February, after which the final decision will be published.
The rest of the UK’s operators will likely follow suit in short order, with Ofcom expected to implement the new measures later this year.
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