Prices soar for mobile contracts: what you need to know

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Before the middle of the year, millions will see the cost of their monthly mobile contracts rise, in line with the Retail Prices Index (RPI).


A bit of boring background first, just to briefly explain why this is happening (if you dont care, scroll down to what can be done about it). RPI is a measure of inflation published by the Office of National Statistics each month which measures the change in the cost of a representative sample of retail goods and services. Mobile phone providers are allowed to increase prices because they typically have a clause in their terms and conditions (you know, the small print bit that people rarely read) that warns of potential changes in line with the RPI.

So, are you affected?

  • EE is the first to increase prices, from 30 March, by 4.1% (in line with Decembers RPI).
  • Next up is O2, which will increase its prices by 4% (in line with Januarys RPI) in April.
  • Vodafone is also increasing its prices in April. This increase is currently unknown as it will be in line with Marchs RPI.
  • In May, Three will increase its prices by 4% (again, in line with Januarys RPI).

Others may follow suit so do keep your eyes open for communications from your provider.

If you are affected, what can be done?

This depends on whether you are out of contract or not.

Out of contract

If you have finished your minimum contract term, happy days. You can leave your provider without paying a penalty (providing you give notice) and if you shop around, or negotiate with your current provider (pretending you want to leave is always a good trick for getting the maximum discount), you are likely to be able to get a better deal.

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Not such good news here, Im afraid. If you are still mid-contract, because of the aforementioned sneaky clause in the small print you unfortunately cannot leave without paying a penalty. This is the case for EE, O2 and Three customers. If you are a Vodafone customer who took out a contract before 5 May 2016, you can leave penalty-free.

However, don
t give up! If you are mid-contact but unhappy about paying the increase, or unable to afford it, do get in touch with your provider and see if anything can be done. For instance, if you are approaching the end of your mobile contract, you might be able to switch to a cheaper deal. If there is no joy there, make a note of when your plan is due to end, so you can start shopping around before it finishes and escape your current contract at the earliest opportunity.

Just for completeness, we should mention that telecoms regulator Ofcom states that you can leave your mobile contract penalty-free if you have experienced
material detriment as a result of a price hike. However, it is highly unlikely that a rise linked to RPI would be seen as sufficient detriment, especially as customers were warned about these possible RPI rises in the small print. Hey, if youre a betting man, or woman, give it a go, but be prepared not to get very far with that particular argument.

General cost-saving tips

Not wanting to end on a downer, here are some tips for saving those precious pennies when it comes to mobile phone choices:

  • If you sign up to a contract and find that your usage is consistently less than expected, theres nothing to lose by calling your provider, explaining the situation and trying to renegotiate your contract.
  • To avoid going over your data allowance, use Wi-Fi when its available. It may sound obvious (and patronising sorry!) but its so easy to forget, especially when 3G and 4G are now so widely available. However, avoid using public Wi-Fi for anything that could make your personal information available to hackers.
  • If you’re getting a new handset, don’t just chuck your old one in a drawer – recycle it and you could earn hundreds of pounds.
  • Consider going SIM-only. Although buying the handset is a large initial expense, if you can afford it, it is typically much cheaper over two years to buy the handset and get a cheap SIM-only deal than it is to get a contract. Plus, with SIM-only you could gain greater flexibility as you can often sign up to rolling contracts of, say, 30 days instead of a fixed term. Note, however, that the latter is likely to be better value, although less flexible.

Sign up to Bean today to track all your contracts and take control of your finances. With tools to cancel unwanted contracts, switch to better deals and remind you of upcoming renewals you’ll never overspend on your bills or subscriptions again! 

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