Soaring inflation in the UK threatens to trigger one of the biggest annual price hikes on record for broadband and mobile customers. As it stands, customers with BT Broadband, EE, Plusnet, Vodafone, O2, TalkTalk, Shell Energy, among others, could see their monthly bills increase by around 9% in March or April 2022, which is double the annual price increase introduced by the same companies last year. For those already worried about the dramatic increase in energy bills and household taxes, this could be a blow.
With few exceptions, annual price increases are part of every broadband contract. And it’s not just a trick for Internet Service Providers (ISPs) to withdraw a little more money from your checking account each month, businesses are facing increasing costs from providers, let alone. new system development and infrastructure investments – such as BT-owned Openreach’s ongoing plan to upgrade 25 million homes across the UK to fiber-optic broadband by December 2026 , which will also cost more.
In an attempt to offset these costs, the broadband providers listed above have linked annual price increases to the rate of inflation, known as the Consumer Price Index (CPI). Most suppliers will commit to raising prices by a fixed amount (3.9% for BT and EE, for example) plus the CPI inflation rate released in January. This fixed formula means that customers are aware that prices will increase throughout their contract and, looking back on previous years, can have a good nudge in calculating what kind of additional fees they will have to pay each year. . mobile or broadband provider.
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Last year, with a CPI measured at 0.6%, most mobile and broadband carriers charged customers a total annual price increase of around 4.5% in the first few months of the year. year. Since January 2021, there has been a dramatic increase in inflation, mainly due to soaring fuel costs as well as supply issues that have driven prices up across the UK. The confirmed CPI figure for October 2021 was 4.2%, with some estimates predicting it could peak at around 5%.
Forecasts suggest that the CPI will continue to rise. Most ISPs will take the CPI as measured in January, which should not be less than 4%. Compared to 0.6% last year, this is a huge increase. Coupled with the 3.9% charged by BT and EE, customers will consider price increases of at least 7.9%. If you pay around £ 35 per month for your broadband, that works out to an additional £ 2.80 per month – or an additional £ 33.60 over the next 12 months.
O2 customers will see a slightly different calculation as the company calculates its annual increase based on a fixed Retail Price Index (RPI) of 3.9%, which is a measure of inflation in the country calculated monthly. 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 would face the biggest price hike.
Meanwhile, Sky Broadband, Sky Mobile, Virgin Media, and Three Mobile charge a fixed 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 increase by 4.5% next year. This is about half of what is currently expected for ISPs that rely on CPI or RPI. However, all of this could be subject to change as the tariffs that will be used by ISPs to calculate the annual increase have not yet been released.
The only thing that could seriously lower your bills is switching to a new contract with the same provider or a competing broadband company. If you are currently under contract this will not be possible – although it may be worth talking to a customer service representative as they may be able to give you a new offer if you are ready to sign up for a 24 additional months, for example. If you no longer have a contract, some great offers are currently only available to new customers. While you still face an annual price hike with the majority of UK broadband providers, if you start with a lower monthly cost – or get faster speeds, TV channels, or more mobile data. – for the same cost, it should make this bitter pill a little easier to swallow.
Speaking to Express.co.uk, a BT spokesperson said: “As usage on our networks continues to increase and our customers rely more than ever on us for connectivity, it is crucial that we continued to invest in our network, services and As such our prices are expected to increase next year as per our terms and conditions, however customers on BT Home Essentials, BT Basic and Home Phone Saver will not see increase in their prices in 2022 and we are looking into how we can help support others who may be financially vulnerable. “
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