Virgin Media and O2 customers are braced for 8.8% price hikes in April – the highest in percentage terms across all the major broadband and mobile firms, according to campaign group Which?
It said that, for those who are mid-contract, their only alternative is to pay an exit fee to end their deal.
For Virgin Media customers, they face an annual broadband increase of £39.14, while O2 sim-only mobile customers face a £26.44 annual price hike.
The consumer champion revealed that, while most other providers use the Consumer Prices Index (CPI) measure of inflation as the base for price hikes, which adds around 3-3.9%, Virgin Media and O2 use the Retail Prices Index (RPI) measure, which tends to be higher.
But, as these price hikes are written into contracts, if customers want to break it early, Which? calculates that Virgin Media customers could face an exit fee of £403.91 to switch away 12 months early.
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The equivalent for the O2 customer means they’d fork out £288.46 if they wanted to walk 12 months early.
However, for those who are out of contract, there’s no need to accept the price hikes, as you can switch away without penalty.
‘Cash in one last time at the expense of customers’
Industry regulator Ofcom has recently announced it is planning to ban mid-contract price hikes linked to inflation later this year.
Which? said it is “unconscionable” that broadband and mobile providers are still planning to go ahead with this year’s inflation-linked price rises, which will impact millions of people, even after the regulator declared this practice causes substantial consumer harm and proposed a ban.
It has called for all providers, including Virgin Media and O2, to scrap this year’s hikes “so new customers are not trapped in these unfair contracts”.
Rocio Concha, Which? director of policy and advocacy, said: “Virgin Media and O2 customers face a lose-lose choice between huge price hikes and crippling exit fees. This comes on top of up to 17% increases faced by some O2 customers last year – few would have anticipated such steep price rises when they signed up.
“Ofcom has clearly stated that the practice of inflation-linked mid contract price rise terms can cause substantial consumer harm. Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.”
What does Virgin Media O2 say?
A spokesperson for the companies said that the amount the company receives from price rises is outweighed by the £5m it invests each day to upgrade its networks and services.
They added that the Which? analysis shows that the cost of telecoms services overall have fallen by a fifth since 2017, while speeds and usage have increased.
