Mobile phone customers face ‘lose-lose’ situation as bills go up

Mobile phone customers face either a “huge” mid-contract price rise or a “crippling” exit fee from April, according to a watchdog.

Which? says Virgin Media and O2 are expected to hike prices by up to 8.8% in April – the highest increase in percentage terms among major providers.

The alternative is a potentially “exorbitant” exit fee, with its analysis suggesting their customers could face a combined cost of up to £692.37 if 12 months were remaining on their contracts.

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Which? calculations suggest an in-contract Virgin Media customer could see their annual broadband bill increase by £39.14 – or be charged an exit fee of £403.91 if they were to leave their contract a year early.

Since the companies merged, Virgin Mobile customers have been migrated to O2 and the providers have begun offering bundled deals.

Media regulator Ofcom is currently reviewing inflation-linked, mid-contract price rises but is yet to publish its final decision on its proposals to ban the practice.

Which? director of policy and advocacy Rocio Concha described a “lose-lose” choice for Virgin Media and O2 customers as “few would have anticipated such steep price rises when they signed up”.

She added: “Ofcom has clearly stated that the practice of inflation-linked mid contract price rise terms can cause substantial consumer harm.

“Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.”

Ofcom’s latest figures show Virgin Media is the most complained-about broadband, landline and pay TV provider and received just one star for customer service in Which?’s annual broadband provider rankings.

Meanwhile, the average O2 SIM-only mobile customer faces a £26.44 annual price hike, the highest increase of any network by percentage but slightly less than Vodafone, which has higher prices overall on average.

Virgin Media O2 said customers faced increases of “up to” 8.8%, because the additional 3.9% increase on top of RPI (Retail Price Index) would not be added to the bills of “millions” of customers, and it only applied price increases to customers’ airtime plans, not their device plans.

The average effective mobile price increase would be 5%, not 8.8%, it said.

A Virgin Media O2 spokesman said 2023 was a “record year for traffic” on their networks and that the firms are “investing heavily” to ensure they continue to “provide fast and reliable connectivity”.

The amount received from price increases is “greatly outweighed” by the £5m they invest “every single day” to upgrade networks and services, he added.

The spokesman added: “Which?’s own analysis shows that we continue to offer excellent value, with cable customers paying an average of just 10p more per day, and mobile customers facing an effective average increase of just 5p a day, for services they’re using almost constantly.

“This is further backed up by recent independent analysis which found that the cost of telecoms services has fallen by a fifth since 2017, while at the same time speeds and usage have increased significantly.”