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TMCNet:  Money: Ofcom clamp on 'unfair surprises': Mobiles: Regulator acts to combat mid-term price increases. Rupert Jones reports

[January 04, 2013]

Money: Ofcom clamp on 'unfair surprises': Mobiles: Regulator acts to combat mid-term price increases. Rupert Jones reports

(Guardian (UK) Via Acquire Media NewsEdge) Consumers are being stung to the tune of pounds 150m a year by mobile-phone companies that hike people's bills mid-contract. But a clampdown is on the way. Telecoms regulator Ofcom this week proposed that in order to protect people from "unfair surprises", customers will be allowed to cancel without penalty if their provider changes the terms of their deal.


Ofcom's announcement comes days after O2 revealed that it will be increasing monthly mobile bills by 3.2% for up to 7 million people from 28 February. This means someone currently paying pounds 35 a month will pay pounds 36.12, an increase of pounds 13.44 a year.

Consumer group Which claimed this would result in O2's customers paying pounds 45m more a year, and that in total UK consumers face a pounds 150m-a-year hit as a result of mid-contract price hikes announced by five companies (O2, Vodafone, Orange, T-Mobile and Three) during the last year or so.

Ofcom has been looking at how to protect customers on "fixed" mobile phone contracts from unexpected price rises, and had previously said that the existing rules potentially "harm" consumers.

In November, Vodafone upped bills for as many as 10 million customers by up to pounds 1.55 a month. The increase was branded "shocking" by Which and came a year after the company "simplified" customer bills by rounding them up to the nearest 50p.

Most consumers are unaware that mobile-phone companies can increase prices after someone has signed up to what they thought was a fixed price for a specified period. Consumers are usually unable to cancel without paying a fee, unless the increase is above a certain amount.

Ofcom says its proposed approach - likely to take effect in the autumn - is to intervene to allow consumers to cancel their deal without penalty if their company announces any price increase during the contract. The regulator's measures would also protect consumers on fixed contracts for landline and broadband services.

Captions: O2 customers may pay pounds 45m a year more (c) 2013 Guardian Newspapers Limited.

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