Phone giants charge extra £250,000 a day on ‘fixed price’ deals

By CLAIRE SMITH
Published on 16/07/2012 00:00

MILLIONS of customers with “fixed price” mobile phone deals have been hit by increased prices for the services they use, according to consumer organisation Which?

The consumer watchdog has complained to Ofcom, saying people who sign up for a year or two years should be given a guarantee that the rate they sign up for will be the one they pay.

Which? said as many as 10.5 million consumers may have been hit by price increases with Vodafone, T Mobile and Orange all raising charges yet keeping customers tied to contracts.

Research by Which? found that 70 per cent of mobile phone users were unaware that clauses written into the small print of their phone contracts meant companies were free to increase their prices.

This week, Three mobile became the latest operator to use the tactic, increasing its “fixed” prices by 3.6 per cent – in a move that will affect more than one million customers.

On a £25 monthly plan, the 3.6 per cent increase means a rise in price of about 90p extra a month, or £11 per year.

Vodafone, T Mobile and Orange have already hit customers with a series of price rises over the past year.

Research by Which? suggested the price increases may be netting phone companies an additional £90 million a year – nearly £250,000 every day.

The consumer organisation has launched a new “Fixed Means Fixed” campaign – calling for more clarity on phone contracts and asking Ofcom to outlaw the right to increase monthly charges while keeping consumers tied in to a contract.

More than 1,700 people have contacted Which? in support of its campaign.

After the T Mobile price increase, one customer said: “It’s bad enough trying to work out which tariff is best. The tariffs that are available always shortchange the users and if you go over your allowance in the contract you pay heavily for it. I have eight business phone contracts with T-Mobile and as they run out I will go elsewhere.

“T-Mobile are trying to justify their increase as necessary to cover investment costs in new technology. At the time of the purchase of my contracts, these were things that I may or may not have wanted, so why should it be forced upon me. T-Mobile is making huge profits and hasmade a business decision to make even more by terms and conditions set out in their small print, which most people cannot understand.”

Which? is calling for the quality and the price of fixed-term contracts to remain exactly as they are set out at the beginning of the contract.

It argues that mobile phone operators that wish to retain the right to change the terms of the contract should also offer consumers the right to end the contract without penalty if the prices go up.

The consumer organisation is also calling for clarity in the way mobile phone contracts are laid out – saying marketing material should clearly state that prices may be subject to change during the course of the contract.

Which? executive director, Richard Lloyd, said: “Millions of people are forced to pay more than they expected at a time when household budgets are already squeezed. They are then trapped in a contract, unable to switch to a cheaper provider without paying a hefty penalty.

“Ofcom must intervene now and stamp this out.”