Britain’s communications regulator has put its foot down on telecoms companies hiking prices mid-contract due to inflation, announcing a ban on this practice from January 2025.

Under new Ofcom rules, telcos must tell customers upfront exactly how much their bill could rise and when, to ensure there is “sufficient certainty and clarity” about what they will pay.

The watchdog has expressed concern that the old practice left customers dealing with financial uncertainty, as many major UK phone, broadband and pay TV providers included price rises tied to future inflation rates in their contracts.

Historically, providers have implemented annual price hikes linked to inflation, often compounded by an additional 3.9 per cent each March or April. As of April 2024, it was estimated that around 60 per cent of broadband and mobile customers were locked into contracts subject to these unpredictable increases.

“This leaves customers without sufficient certainty and clarity about the prices they will pay, and unfairly assuming the risk and burden of financial uncertainty from inflation, which is something people cannot predict and do not understand well,” said Ofcom.

Cristina Luna-Esteban, Ofcom telecoms policy director, said: “With household budgets squeezed, people need to have certainty about their monthly outgoings. But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.

“We’re stepping in on behalf of phone, broadband and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily and take advantage of the competitive market we have in the UK.”

Effective from 17 January 2025, the new rules will cover phone, broadband, and pay TV providers, some of which might need until 2025 to adapt their processes. BT and Vodafone have already updated their pricing practices in anticipation of the new regulations.

Rocio Concha, director of policy and advocacy at consumer group Which?, said the new rules are a “huge win” for customers. She said: “Which? has led the campaign to protect millions of households from being blindsided by telecoms price rises and give them certainty about the cost of these essential services.

“With Ofcom calling time on these unfair price hikes, providers must stop this practice immediately. Ofcom now needs to make sure that future mid-contract price rises are set competitively.

“It’s disappointing that ‘prices may vary’ terms have not been banned. The regulator must be prepared to intervene if these ad hoc increases are used as a back door for providers to impose unpredictable price increases on customers,” Concha added.