What’s the latest on broadband mid-contract price rises?

In recent months, there has been a slew of news reports about mid-contract broadband price rises.

At a time when household incomes are under unprecedented pressure, there is no upside to receiving a letter from your ISP announcing a rise in your monthly direct debit.

Industry estimates suggest sixty per cent of UK broadband customers endure inflation-linked price rises each year – typically inflation plus a seemingly arbitrary 3.9 per cent.

ISPs are only obligated to give customers one month’s notice of mid-contract broadband price rises, alongside the right to walk away without incurring early penalty fees.

In practice, consumers rarely do so, especially since their next provider could pull the same trick.

Industry regulator Ofcom has now announced that inflation-linked price hikes will be banned from next January.

In the meantime, other ISPs are making their own price guarantee pledges to secure future market share.

Take a hike

When inflation was in double figures, ISPs routinely announced 15 per cent price hikes for new and loyal customers alike.

From the 17th of January next year, this will be prohibited.

ISPs must guarantee there’ll be no unexpected price increases during each fixed-term broadband contract.

They’ll still be able to increase their prices during a contract period, but any rises must be fully itemised up front.

If a new 24-month contract starts off at £39 but will increase to £42 after a year, you’ll at least know a mid-term hike is coming before you sign up.

There’ll be no more ‘to maintain our current levels of service’ letters arriving halfway through a fixed-term contract.

These new rules also apply to mobile phone companies and pay TV providers, whose products are still sometimes bundled together in triple-play packages.

(We recently reported on the decline of landlines, which explains why the once-popular quad play packages have now fallen out of favour).

If an ISP does try to impose a price rise without clarity, customers will be able to complain to an ombudsman, though it’s unlikely any company would risk the negative publicity.

How have ISPs responded?

Some ISPs have remained noticeably quiet about Ofcom’s regulatory changes, while others responded more proactively.

As of last Monday, new TalkTalk contracts will incur a £3 monthly increase each April, as opposed to their current policy of CPI inflation plus 3.7 per cent increases.

This mirrors similar announcements by other industry big hitters, including BT, Plusnet and Vodafone.

Even £3 per month is still an extra £36 per year over and above today’s advertised prices, but it’s close to an inflation-only increase and – crucially – you’ll know about it in advance.

Altnets have historically been less likely to impose sudden price rises halfway through a broadband contract. Some Grain customers have been on the same price tariff since 2021.

Are broadband costs going up in real terms?

While average broadband download speeds almost doubled between 2018 and 2023, it may surprise you to learn that bills fell over this period.

A typical average superfast broadband bundle would have cost you almost £49 in 2018. Last year, a comparable deal was priced at just over £42.

Over the same period, the availability of full fibre broadband increased from six per cent of UK dwellings to 57 per cent, and typical monthly data consumption more than doubled.

In other words, we’re paying less to get more – a welcome contrast to the spiralling prices and declining service levels in other consumer-facing industries.

It’s unfortunate that Ofcom didn’t ban mid-contract broadband price rises altogether, since they remain hard to justify, but the imminent price clarity will be a step in the right direction.