O2 announces price rise that avoids new Ofcom rules

O2 is putting prices up for pay monthly mobile customers but despite new rules users won’t be able to leave mid-contract without penalty.

O2 has announced it’s putting prices up by 2.7% for pay monthly mobile phone customers from 1st March.

The price hike is in line with the Retail Prices Index (RPI) measure of inflation for December and O2's eight million pay monthly customers will see the increase on their March bill.

The mobile giant announced the move on the same day telecoms regulator Ofcom announced new rules to protect customers from mid-contract price rises. Now if a mobile phone, landline or broadband provider raises prices mid-contract, customers can leave without penalty.

However, O2 has managed to circumvent this new ruling by linking the price rise to inflation, which is excepted.

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What’s changing?

O2’s 2.7% RPI-linked price hike will apply to all pay monthly mobile phone customers.

For O2 Refresh customers the increase applies to the Airtime Plan rather than the Phone Plan.

If you're on a SIM-Only tariff or a pay monthly tariff not linked to O2 Refresh, RPI will be applied to your monthly subscription charge.

And from 28th February some prices will go up for out-of-bundle calls and messages and international calls.

UK voice calls will go up from 35p to 40p per minute, a UK text message will go up to 15p from 12p and multimedia messages will go up from 35p to 40p.

Meanwhile, international calls will go up by at least 10p per minute.

People calling Turkey, Albania, Serbia, Croatia, Bosnia, Macedonaia, Montenegro, Algeria, Libya, Morocco or Tunisia face the biggest hike with costs going up from 50p per minute to 80p. While the most expensive calls to Zone 6 will go up from £1 to £1.20 a minute.

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Dodging new rules

O2 pay monthly customers that signed up before 23rd January can’t do much about the price changes. This is because Ofcom’s new rules only apply to contracts made on or after 23rd January.

But customers that signed up after that date won’t be able to leave mid-contract without penalty either thanks to a clause in Ofcom’s guidance.

Ofcom’s new rules still allow communication providers to change a monthly subscription each year in line with a specific percentage or index like RPI as long as this is a practice made clear to customers when they sign up.

O2’s new terms and conditions state that monthly subscription charges will increase (or decrease) every year in line with RPI. So none of O2's eight million customers can take advantage of the new rules.

And if other providers follow suit, all telecoms customers could face yearly price changes linked to inflation at a minimum.

Consumer group Which? described O2’s move as ‘disappointing’. It had campaigned for an end to all mid-contract price hikes via its Fixed Means Fixed campaign.

Executive director Richard Lloyd said: “We’ll be keeping a close eye on other operators to make sure they follow the rules and give customers clear information about contracts at the point of sale. Unfortunately our mystery shopping research shows this doesn’t always happen when people buy mobile phones.”

A spokesperson for O2 said that shoppers would be made aware of the new terms before they signed up.

He added: "Price increases are never welcome but inflation has an impact on our costs. For most of our customers it will mean an additional charge of less than 60p on their monthly subscription. We continue to invest in our network and the services that matter to our customers while still offering great value for money."

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