Skyrocketing inflation in the UK threatens to trigger one of the biggest annual price hikes for broadband and mobile phone customers on record. As it stands, customers with BT Broadband, EE, Plusnet, Vodafone, O2, TalkTalk, Shell Energy, amongst others could see their monthly bills rise by around 9% in March or April 2022, which is double the annual price increase introduced by the same companies last year. For those who are already worried about the dramatic rises in household energy bills and taxes, this could be a serious blow.
With a few exceptions, annual price increases are a part of every broadband contract. And it’s not simply a ruse for Internet Service Providers (ISPs) to squeeze a little more cash from your current account every month, companies face rising costs from suppliers, not to mention that developing new systems and investing in infrastructure – like the ongoing plan from BT-owned Openreach to upgrade 25 million homes across the UK to full-fibre broadband by December 2026 – costs extra too.
To try to compensate for these costs, the broadband providers listed above have linked annual price increases with the rate of inflation, known as the Consumer Price Index (CPI). Most providers will commit to raising prices by a set amount (3.9% for BT and EE, for example) plus the CPI rate of inflation as published in January. This set formula means that customers are aware that prices will rise throughout their contract and, by looking back at previous years, can have a good stab at calculating what sort of additional fees they’ll be expected to pay each year they stick with the same broadband or mobile phone provider.
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Last year, with CPI measured at 0.6%, most broadband and mobile phone operators charged customers a total annual price hike of around 4.5% within the first few months of the year. Since January 2021, there has been a dramatic surge in inflation, driven primarily by spiralling fuel costs as well as issues around supply that has pushed up prices across the UK. The CPI figure confirmed for October 2021 was 4.2%, with some estimates predicting that it could peak at around 5%.
Forecasts suggest that CPI will continue to increase. Most ISPs will take the CPI as measured in January, which isn’t predicted to be any lower than 4%. Compared to 0.6% last year, that’s a huge increase. Coupled with the 3.9% charged by BT and EE, customers will be looking at price increases of 7.9% at the very least. If you pay around £35 a month for your broadband, that’s an extra £2.80 each month – or extra £33.60 over the course of the next 12-months.
O2 customers will see a slightly different calculation as the company calculates its annual increase based on a fixed 3.9% plus Retail Price Index (RPI), which is a measure of inflation in the country calculated each month by the Office For National Statistics based on the cost of a sample of various retail goods and services. RPI was measured at 6% in November, which would mean O2 customers face the biggest price rise.
Meanwhile, Sky Broadband, Sky Mobile, Virgin Media and Three Mobile charge a set amount each year, with no variation based on other factors, such as inflation. For example, Three Mobile has already confirmed to its customers that prices will only rise by 4.5% next year. That’s about half of what is currently projected for ISPs that rely on CPI or RPI. However, all of this could be subject to change as the rates that will be used by ISPs to calculate the annual hike haven’t been published yet.
The only thing that could seriously slash your bills is switching to a new contract with the same provider or a rival broadband firm. If you’re currently in-contract, this won’t be possible – although, it might be worth talking to a customer service representative as they might be able to switch you to a new deal if you’re willing to sign up to a further 24-months, for example. If you’re out-of-contract, there are some brilliant deals only available to new customers right now. While you’ll still be faced with an annual price rise with the majority of broadband suppliers in the UK, if you’re starting from a lower monthly cost – or getting faster speeds, television channels, or more mobile data – for the same cost, that should make this bitter pill a little easier to swallow.
Express.co.uk has rounded up some of the best broadband deals available in the UK right now. Find them below…
Published at Thu, 30 Dec 2021 07:31:00 +0000