Some UK mobile networks increase the cost of your mobile phone contract with RPI or CPI inflation each year. Find out more about mid-contract price rises.
In the UK, some mobile networks will increase the price of your contract every year. This can mean the monthly price of your mobile phone contract going up with there being no option for you to end your contract unless you pay an early termination fee. This price increase is normally calculated from RPI or CPI inflation and can mean a regular annual increase of a few percent to your mobile phone bill.
In this article, we’ll discuss the mid-contract price rise policy on different UK mobile networks. We’ll also look at the interplay between this and capped contracts, discounts you may receive on your phone bill and Ofcom’s legislation around this.
Mobile Contract Price Rises
In the UK, some mobile networks will increase the price of your contract every year with inflation. This can mean the monthly price of your mobile phone contract increasing whilst you’re still tied in to the contract.
In recent years, inflation-based price rises have averaged around 3-4% per year. Over the course of a 24-month contract, this can lead to your monthly phone bill increasing by about 7%. For instance, a £50 per month contract may actually rise to costing around £53.50 per month after two years.
One area to watch out for very closely is the issue of discounts that are applied to your mobile phone contract. This is because discounts typically do not increase with RPI inflation. This means the overall price rise you experience man be substantially larger than expected.
To give an example, a £10/month plan could be structured in the contract as a £20 plan with a £10 discount. The price increase may then be applied to the £20 figure, whereas the £10 discount will remain the same. Assuming inflation of 3.5% per year, the monthly fee would increase to £10.70 the following year (£20.70 with the 3.5% price rise, less the £10 discount which is fixed). In this case, the price rise you’ve actually experienced on your contract is 7%, or double the level of RPI inflation.
These larger-than-expected price rises are often seen on discounted contracts that are offered through customer retentions or that are purchased during a sale. It may also occur when adding a student or staff discount to your plan.
Ofcom (the UK’s regulator for telecommunication services) legislated in January 2014 to protect consumers against “unexpected mid-contract price rises”. At the time, many people had expected this to mean the end of mid-contract price rises on mobile phone contracts. However, the legislation unfortunately kept the door open for price rises happening providing the mobile networks detail this inside their contract.
In October 2018, Ofcom made it a legal obligation for all mobile networks to offer a spend cap on their contracts. This spend cap only applies to out-of-allowance charges and does not prevent the cost of your core monthly plan going up.
Price Increases: By Mobile Network
For customers joining BT or upgrading their plan after the 11th January 2019, monthly prices will increase every year with CPI inflation (Consumer Prices Index). The price increase will take effect from March each year. This is stated on page 2 of the BT Price Guide and in the BT Mobile online help pages:
If you joined BT before the 11th January 2019 and have not upgraded your price plan since that date, the annual CPI price increase will not apply to you. On BT, all of your discounts are taken into consideration when calculating the CPI increase.
On EE, the monthly cost of your price plan will increase every year with RPI inflation. This increase will take effect in March and will be calculated based on the cost of your price plan before any discounts are considered. For this reason, the actual price rise you experience may be higher than expected.
This information is stated in the small print on EE’s website:
It’s detailed in more depth in clause 7.4 of EE’s Pay Monthly terms and conditions:
On giffgaff, there are no regular annual price rises as you’re not signing up for a Pay Monthly contract. Instead, goodybag plans work as a Pay As You Go bundle. These bundles can actually be changed at any time, either to increase or decrease the monthly price or allowances.
In the past, goodybag price changes have generally been in the favour of consumers. For instance, the £10 goodybag now includes 3GB of data, but previously included only 2GB of data (and only 1GB before that). The increasing amount of competition in the Pay As You Go space means this trend is probably likely to continue over the next few years.
If you’ve purchased a handset from giffgaff and are paying for it in monthly instalments, you would have taken out a P2P loan from RateSetter. This is structured as a consumer credit agreement and payments will not increase with inflation.
If you’ve joined or upgraded your plan on iD Mobile since the 15th June 2017, your monthly line rental will go up every year with RPI inflation. This price increase will take effect in April, and will be based on the RPI measure as announced in February.
The details of this annual price increase are stated on the iD Mobile website:
On Plusnet Mobile, mobile phone plans with a minimum term will increase in price every March with CPI inflation. Accordingly to the Plusnet website, this shouldn’t apply to 30-day rolling plans or plans taken out before the 29th November 2016:
The price rise will take place in March each year and will be based on the CPI inflation rate as published in January.
Source: Plusnet Help: Price Increases for Plusnet Mobile Plans
On O2, your Pay Monthly airtime tariff will increase in price with RPI inflation every year. This price adjustment is detailed on the O2 website, and essentially means your phone bill will go up each April based on February’s published RPI index:
If you have an O2 Refresh plan, it will be split into two parts. Only the airtime part of your tariff is subject to an RPI price increase. The monthly payment for your phone is a separate consumer credit agreement and is therefore not subject to an RPI increase.
If you choose a non-Refresh plan (offered by third-party retailers like the Carphone Warehouse), the RPI increase will apply to your entire monthly payment. This may make it advantageous to choose the O2 Refresh version of the same plan.
Sky reserve the right to change their prices at any time, but when they do, customers are given the opportunity to exit their contract with no early termination charge. Because of this, we don’t expect there to be any inflation-related price rises on Sky Mobile.
From the Sky Mobile terms and conditions:
At the time of writing, Tesco Mobile is the only remaining mobile network to guarantee that your monthly subscription charge will never increase during the minimum term of your contract. This is detailed in the Tesco Mobile Tariff Promise:
If you’ve taken out a Pay Monthly handset plan since the 29th May 2015 or a Pay Monthly SIM card from Three since the 13th December 2018, it will be subject to an annual RPI price increase. This is detailed in Three’s price guide and support centre:
Customers on a Virgin Mobile Pay Monthly contract will see the price of their plan increasing in July each year. The increase will be calculated based on the rate of RPI inflation as announced in April:
If you have a Freestyle price plan, your plan will be split into two parts: a payment plan for your mobile phone and a separate contract for your airtime. Your mobile phone payment plan is actually a consumer credit agreement so isn’t subject to RPI increases. Only the payment for your airtime will increase with RPI inflation.
If you’ve taken out a Pay Monthly contract with Vodafone since the 5th May 2016, it will be subject to an annual price rise in line with RPI inflation. This increase will happen in April and will be based on the RPI figure published in March.
From Vodafone’s website:
If your contract was taken out prior to the 5th May 2016, it will be covered by a Fixed Price Promise and will not be subject to an annual RPI price rise.
Beyond the price rises that are listed in your contract, mobile networks also reserve the right to increase prices further at any time. However, if they choose to do this, they’ll need to give you 30 days written notice as well as the opportunity to exit your contract penalty-free.
Early Exit Fees
If your mobile phone contract is subject to a mid-contract price rise, and if that price rise was described in the contract at the point when you began it, you’ll unfortunately be unable to exit your contract without paying the relevant early termination charge that is applicable to your contract.
If your mobile phone provider increases the price of your contract by more than what is stated within the terms, this will normally give you grounds to exit your contract early without charge. It is typically quite rare for this to happen on mobile phone contracts, but has occasionally happened in the past for landline and home broadband providers.
For more information about the price rises that apply to your mobile contract, please refer to the terms and conditions on your mobile network’s website. The BBC News website also has further details about how inflation is calculated and the latest inflation-related news and predictions.