As expected BT and EE have confirmed that their annual price increase for this year will be 4.5% (effective from 31st March 2021), which reflects their new policy (here) of raising prices by the Consumer Price Index (CPI) rate of inflation – as published in January 2021 (0.6%) – plus an additional 3.9%.
The change in approach, which was first unveiled in September 2020, came as a shock to many because it represented a dramatic change from the policy that had been adopted only a year before (here and here), which aligned their future price rises to the Consumer Price Index (CPI) rate of inflation – without any additional increases like we now see (i.e. in March 2020 the increase was just 1.3%).
BT has now updated their Residential Tariffs document to reflect the January 2021 CPI rate, which was just 0.6% and thus many customers can expect to face an annual rise of 4.5% from 31st March 2021. However, if you were lucky enough to have joined the ISP under their previous terms and those are still active, then you’ll only see an increase of just 0.6% to match the CPI rate.
One advantage here is that BT’s new terms make customers legally aware of future price increases when they sign-up or re-contract (transparency is a good thing). On the flip side this also removes some of the protection afforded by Ofcom’s rule against mid-contract price hikes that go above the level of inflation (i.e. the contract makes you aware of this increase when you join and thus it’s harder to argue for a penalty-free exit).
Naturally, not everybody reads the small print, which is the classic catch in BT’s approach. As such if you’re currently on terms where the new policy applies and still want to switch ISP – without being hit by exit fees, then you’ll most likely be stuck waiting until the end of your contract in order to do that. Alternatively, existing customers could try haggling for a better price (Retentions – Tips for Cutting Your Broadband Bill).
We should point out that a number of other operators, such as Plusnet and Vodafone, have since adopted a similar approach to BT and EE.
A BT spokesperson said:
“Back in September we made some changes to our contract terms as we started to bring all our products and brands in line with a predictable annual increase. We are currently reminding customers that these changes will start from April.
Network usage is doubling as our customers rely on us for connectivity more than ever before, and this small annual increase reflects the investment needed to support growing demand. The average increase for a broadband/ Mobile customer is less than £2 a month, meaning our customers will continue to benefit from the fastest networks, the best customer service and the safest products.”
In fairness, annual price hikes are fairly common among all of the largest providers because they’re frequently adding all sorts of new services, running big first year discounts, adapting to new rules (e.g. automatic compensation), developing new systems (e.g. improved switching) and consumers are also gobbling significantly more data (COVID-19 has had a particularly big impact on broadband usage).
Indeed, BT states that the latest price increase “reflects the increase in the costs to run and invest in the network and service that we provide.” On top of that the impact of COVID-19 has seen Ofcom and the Government put pressure on broadband, phone and mobile operators to help protect vulnerable consumers and school children during the pandemic. But naturally any additional measures or protections ultimately have a big cost (one study put the figure at £940m – here) and, like it or not, that has to be recouped from somewhere. ISPs aren’t charities, they’re commercial businesses.
Article by Mark Jackson
ISPreview