O2 is increasing its tariffs for subscribers on monthly contracts in the new year. Starting from 28 February 2013, the mobile line rental for its Pay Monthly customers will go up by 3.2 per cent.
That means that an existing customer currently paying £36 a month - the cost of an iPhone 5 contract with unlimited texts and calls and a 1GB data limit - would pay an extra £13.82 a year.
The changes will individual costs of calls, texts and data won't be affected, and the costs for Pay & Go customers will remain steady. O2 has cited inflation as the reason for the rise, with the RPI (Retail Price Index) standing at 3.2 per cent in October.
“We consistently try to provide all our customers with great value and keep our prices low,” said an O2 spokesperson. “However, as external costs continue to rise, we have had to review the impact this is having on what we charge for our pay monthly service. Price increases are never welcome and this isn’t a decision we’ve taken lightly. However, it will help enable us continue to invest in the services that matter to our customers while still offering great value for money.”
Ofcom and Which? respond
A spokesperson for telecoms regulator Ofcom pointed out that such an increase is within O2's rights, as long as subscribers are given at least one month’s notice - which they have been - and are allowed to withdraw from the contract without penalty as a result - which O2 doesn't seem to be sticking to, as customers wanting to end their contract early need to paying a cancellation fee.
“While current rules allow for contracts to include price increases in certain circumstances, after receiving consumer complaints on this wider issue, Ofcom launched a review earlier this year,” said the spokesperson. “This exercise has identified a number of potential issues with the current regime and the adequacy of the levels of customer protection. We will soon consult on ways to better protect consumers from price increases in fixed contracts.”
Meanwhile, consumer rights organisation Which? is unsurprisingly displeased with the price hike.
“This price rise is the last thing O2 customers wanted for Christmas, with millions now being forced into a price increase that will see them paying collectively almost £45m more a year for a contract they thought was fixed,” said Which? executive director Richard Lloyd. “We hope Ofcom listens to the 34,000 people who have already signed up to our Fixed Means Fixed campaign and acts swiftly. Mobile phone companies should be made to drop hidden clauses in their contracts that allow them to hit consumers with millions of pounds worth of unexpected price increases.”