Sunday, 11 April 2021

Largest ever mid-contract price hike could widen the digital divide

by Harry Baldock, Total Telecom
Tuesday 02 March 21

The recent mid-contract price rises by UK operators could have major consequences for millions of people, according to a new study

Today, YouGov has announced the results of its latest study exploring the impact of the latest mobile contract price increases from UK telcos, with results having worrying implications for many across the UK. The study, commissioned by Tesco Mobile, interviewed 2,058 people via an online survey, finding that 9% of respondents had struggled to pay their bills since the onset of the pandemic. Furthermore, 38% said that even a small increase in their household or utility bills would cause them to worry about their finances…

Today, YouGov has announced the results of its latest study exploring the impact of the latest mobile contract price increases from UK telcos, with results having worrying implications for many across the UK.

The study, commissioned by Tesco Mobile, interviewed 2,058 people via an online survey, finding that 9% of respondents had struggled to pay their bills since the onset of the pandemic. Furthermore, 38% said that even a small increase in their household or utility bills would cause them to worry about their finances, with 14% saying that such an increase could see them cut off by their service provider due to missed payments.

This year has seen what Tesco Mobile describe as “unexpectedly high mid-contract price rises” from major operators, increasing as much as 4.5% for Three, Vodafone, BT and EE customers. The increases are set to impact around 40 million people in the UK meaning, meaning millions of people are at risk of having their connectivity services cut off.

Tesco Mobile is calling on other mobile network operators to reverse their price hikes this year and pledge to keep prices frozen throughout the duration of a customer’s contract. Of course, it should be noted that this call to action is somewhat to Tesco Mobile’s advantage, since they already offer capped contracts as standard, and for the past eight years have promised no mid-contract price hikes due to RPI.

“Beyond being misleading, our research has shown that mid-contract price rises in our industry will have a financial impact on those who have already been hit hard,” said Tom Denyard, Tesco Mobile’s CEO. “There could not be a worse time for networks to implement their biggest price rises. For a family of mobile users, the increased costs mean less items in the weekly shopping basket or additional pressure to pay a bill that was higher than expected.”

Part of the issue here is a lack of education surrounding mobile contracts. According to the study, around half of customers simply did not realise that their mobile provider could increase their prices mid-contract. Small print terminology was cited as a major issue, with terms like RPI (Retail Price Index) and CPI (Consumer Price Index) – which are often the basis for this price increases – being misunderstood by 48% and 69% of respondents, respectively.

However, it should be noted that this price increase cannot come as too great a surprise – while not strictly annual, price increases to mobile plans have become fairly routine over the past few years. The study also focusses on mid-contract price rises, as opposed to all price hikes, potentially skewing results.

Nonetheless, these price increases do represent a considerable risk to vulnerable customers and threaten a deepening of the digital divide in the UK. Connectivity, as has been repeated so often, has become integral to daily life for so many of us during the pandemic; this study itself found that 42% believe their phone had become more essential during this period.

Karen Perrier, CEO of national debt charity and helpline, Money Advice Plus, said the organisation had “never known a worse situation – with the potential of more hardship to come.”

“It’s vital that we ensure that people can afford to stay connected and we would really encourage the networks to think again about the impact of their actions and the transparency of their contracts. Most people are unaware that their costs can go up and that there is absolutely nothing they can do about it,” she said.

 

Also in the news:
New UK Infrastructure Bank could boost broadband investment
BT Group chairman announces retirement
To be or not to be: Operators and the smart home crossroads

 

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