BT updates price hike policy ahead of new regulations

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BT is overhauling its policy on mid-contract price hikes ahead of strict new regulations being imposed by the UK’s communications regulator Ofcom. The company said it will stop linking price rises to inflation and instead specify clearly in monetary terms what increases customers can expect. 

The move comes after Ofcom found last year that the way telecoms companies raise prices lacks transparency and can be confusing for consumers. Under BT’s current model, tariffs are adjusted annually in line with the Consumer Price Index (CPI) rate of inflation. However, customers struggle to calculate the impact because inflation fluctuates.

Ofcom has now proposed that operators must state prominently in pounds and pence any price rises at the point of sale, including when these changes will occur. The final decision is expected in the coming months, with new pricing models to be in place four months later.

BT Consumer chief Marc Allera said in a blog post that the company will introduce a “clear and simple” pricing approach this summer that moves away from percentage figures and CPI. He said new mobile customers can expect price rises of around £1.50, while broadband customers will likely face increases of about £3.

Allera admitted that “price change is never an easy conversation to have with customers”, particularly against the backdrop of a cost-of-living crisis. However, he said rises are necessary for BT to cover its own increasing costs.

Ofcom’s intervention follows concern that opaque price hike policies make it difficult for consumers to budget effectively. Under BT’s system, tariffs are lifted each March in line with the previous December’s inflation data. Last year, customers faced an increase of 14.4 percent.  

The regulator wants operators to give customers certainty over what their bills will be over the course of a contract. Its new rules are part of a push to strengthen consumer protections in the telecoms market.

BT said it will still implement a planned rise of 3.9 percent at the end of March, reflecting the latest CPI figure. But this will likely be the last increase tied to the inflation rate before the new regime comes into force.

The announcement comes as BT and other providers gear up to confirm their annual price increases for 2024, after inflation hit 4 percent last month. Recent research found almost three-quarters of consumers would consider switching if their mobile or broadband bill went up again this year.

(Photo by Towfiqu barbhuiya on Unsplash)

See also: Verizon will maintain controversial surcharge despite lawsuit

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