Government disenchanted by surprising O2 value rise | EUROtoday

The authorities has requested the media regulator to revisit its guidelines on cellphone corporations elevating their costs in the midst of a contract, after O2 unexpectedly introduced it was elevating costs by £2.50 a month.

Technology Secretary Liz Kendall mentioned O2’s larger than anticipated value improve is “disappointing given the current pressures on consumers”.

“I believe we need to go further, faster. I am keen that we look at in-contract price rises again,” she wrote in a letter to the media regulator.

Ofcom mentioned it shared the federal government’s concern that “customers who face price rises must be treated fairly by mobile providers”.

O2 mentioned in a press release: “We appreciate that price changes are never welcome, but we have been fully transparent with our customers about this change, writing directly to them and providing the right to exit without penalty if they wish.”

Ofcom has been given till 7 November to answer Ms Kendall’s letter, and mentioned it could reply to her particular questions shortly.

In January, new guidelines got here during which cracked down on cellphone and broadband suppliers rising costs in the midst of a contract with out warning.

However, final week O2 introduced it could be elevating its month-to-month costs by greater than initially promised.

It was in a position to do that as a result of the rise was not linked to inflation, and it has given clients 30 days to depart with out penalty – as long as they proceed paying off the price of their machine.

The firm mentioned it has not gone towards the regulation and Ofcom’s guidelines don’t cease suppliers from elevating costs.

“A price increase equivalent to 8p per day is greatly outweighed by the £700m we invest each year into our mobile network, with UK consumers benefitting from an extremely competitive market and some of the lowest prices compared to international peers,” it mentioned.

Ms Kendall mentioned O2 went “against the spirit” of the foundations in her letter to Ofcom’s chief govt Dame Melanie Dawes.

She has requested Ofcom to look into whether or not the 30-day switching interval makes it simple sufficient for shoppers to maneuver to a different supplier.

“I would welcome your undertaking a rapid review on how easy it is for customers to switch providers,” she mentioned.

“If companies are determined to increase pricing, it is beholden on us to make sure that customers are able to go elsewhere as easily as possible.”

She has additionally requested for an evaluation into whether or not the January guidelines give shoppers sufficient transparency into value rises throughout their contracts.

Ofcom’s guidelines require corporations to inform clients how a lot their payments will rise by in kilos and pence earlier than their contract begins.

O2 initially mentioned its month-to-month costs would improve by £1.80 a month in April 2026 for present clients.

But the agency now says they’ll go up by £2.50 as an alternative.

Ms Kendall mentioned she desires cellphone suppliers to tell all their clients – together with these whose contracts began earlier than the brand new guidelines – how a lot their month-to-month costs will go up by.

“We’ve always said fixed should mean fixed,” mentioned Tom MacInnes, director of coverage on the Citizens Advice charity, and added the present rule “hasn’t gone far enough to protect customers”.

“If one company is able to get away with this, other providers could follow suit,” he mentioned.

“The time has come for the regulator to banish mid-contract price rises for good.”

Meanwhile, telecoms analyst Paolo Pescatore of PP Foresight mentioned UK community operators are “cash-strapped as margins are being squeezed”.

He added: “Striking the right balance between raising much-needed funds and investing in next-generation networks is never easy.”

But he mentioned whereas different suppliers would have normally adopted in asserting related costs rises, “it seems highly unlikely that rivals will follow suit, given the consumer backlash and awareness generated thus far”.