Mid contract increases in prices

[Super+Anthony]

https://www.bbc.co.uk/news/articles/c8j89zmykyvo

Positive news and a step in the right direction from OFCOM and to help the customers with companies like Sky etc increasing our bills mid contract

[MarkGoldsmith]

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@Super+Anthony wrote:

https://www.bbc.co.uk/news/articles/c8j89zmykyvo

Positive news and a step in the right direction from OFCOM and to help the customers with companies like Sky etc increasing our bills mid contract

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@Super+Anthony it doesnt prevent companies form doing mid-contract price rises, what they can no longer do is say its going to go up by x% in the T&Cs, instead they have to state it will go up annual by a exact amount in pounds every year in the T&Cs . Whilst the aim is to make the price rises clearer for consumers when taking out contracts what will likely happen is that the pound amount companies put into the T&Cs will probably on average work out to be a higher amount that if they were using a percentage which was based on inflation.

[Mark39]

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@MarkGoldsmith wrote:

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Whilst the aim is to make the price rises clearer for consumers when taking out contracts what will likely happen is that the pound amount companies put into the T&Cs will probably on average work out to be a higher amount that if they were using a percentage which was based on inflation.

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Completely agree.

Sky were already more reasonable with their annual increases by limiting it to the CPI. Other providers were charging CPI + a margin, of typically 4%.

This change will make price increases more transparent, but not necessarily fairer.

[Super+Anthony]

Thank you both for your comments, very helpful

There needs to be leeway so if customers want to leave early and I suspect OFCOM might do this in the future so customers don't have to pay a cost because if companies can increase mid contract, it should work both ways? I might be wrong though

[lettice]

The full details of this are on the Ofcom website.

https://www.ofcom.org.uk/phones-and-broadband/bills-and-charges/ofcom-bans-mid-contract-price-rises-....

and

https://www.ofcom.org.uk/phones-and-broadband/bills-and-charges/protecting-consumers-from-uncertain-...

This is more an Account and billing discussion, than Sky Stream, so moved this thread.

[PandJ2020]

What it means is certainty in the increase in pounds but the provider now has to 'guess' what inflation is likely to be an will likely err on the side of caution.

So certainty but possibly higher prices.  Ideally competition should regulate but...

[TimmyBGood]

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@Super+Anthony wrote:

There needs to be leeway so if customers want to leave early 

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Any such 'leeway' would require all subscriptions to be more expensive, so penalising the majority of users who don't want or need such flexibility.  ISPs in particular have up-front costs (primarily Openreach fees) to be covered.

[MarkGoldsmith]

Fundamentally it all comes down to basic economics, businesses typically have to raise costs annually due to inflation causing their own costs to go up. If businesses didn't increase costs they would need to make savings by either redundancies (which will start to negatively effect the economy) or cutting the levels of service they are providing ( so the consumers are essentially paying more/the same but getting a worse service as a result).

OFCOM basically had 2 choices in this scenario i think, one is the increase transparency route they took so its clear for people to figure out how much their contract will actually end up being from start to finish ( likely causing the actual cost to go up), or they continued with the percentage based model but put a more realistic cap on what companies could increase by ( for example they could have put in a cap in based on annual inflation rates), which would likely lead to lower costs over the length of a contract but with the increased confusion for some customers who can't calculate what the percentage rise would actually mean for the cost of the contract. One thing is for certain you can't have the increased transparancy whilst ensuring costs are in the consumers interests as those 2 scenarios contradict each other.

The skepetic in me believes they chose the transparency route because thats likely the option that the main players in the market would prefer, thus there would be less of a backlash from them. In theory the regulator shouldn't really care about backlash from the market leaders but ultimately the regulator is there to make sure there are sensible rules and regulations in place and that the market operators are conforming to them, they are increasingly unlikely to do anything massively drastic to change how the market operates which would unite the bigger operators against them.

[TimmyBGood]

@Super+Anthony @MarkGoldsmith @PandJ2020 @lettice 

I haven't seen the Sky pricing, but since last year BT/EE has been quoting a £3 increase in both years of a 24 month minimum term on a £30 broadband service, so that's a 10% and then a 9% increase when inflation is heading to 2%  (the government target)

As noted above, while this undoubtedly gives the customer 'certainty' it's also a higher increase than the historical CPI plus 3.9% calculation would result in for any year where inflation is below 5%

[PandJ2020]

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@TimmyBGood wrote:

that's a 10% and a 9% increase when inflation is heading below 2%

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...my point exactly!  But many firms were using a RPI+x% escalator.  It seems they all want to push the price higher and higher...

[Super+Anthony]

@PandJ2020 That's what it feels like 

[Chasloyal]

I was renweing my contract with BT every single March annually since we moved in to this gaff in 2015 which always resulted in me avoiding mid-contract price rises for our internet. I shall of course be putting that to the test again in a couple of months time now that we've been with EE since at some point last summer, although I have it on very good authority that this 'hack' is available on EE the same that it is on BT.