Which? Virgin Media and O2 customers face lose-lose choice: pay unfair mid-contract price rises or stump up for exit fees that could reach almost £700
|
Virgin Media and O2 customers face being trapped this April as they
are presented with a lose-lose choice between huge mid-contract
broadband and mobile price rises or crippling exit fees, Which?
research has found. Virgin Media and O2 are expected to go ahead
with price increases of 8.8% this April – the latest RPI figure of
4.9% plus an arbitrary 3.9%. These will be the highest hikes in
percentage terms out of any of the major broadband or mobile firms.
The alternative...Request free trial
Virgin Media and O2 customers face being trapped this April as they are presented with a lose-lose choice between huge mid-contract broadband and mobile price rises or crippling exit fees, Which? research has found. Virgin Media and O2 are expected to go ahead with price increases of 8.8% this April – the latest RPI figure of 4.9% plus an arbitrary 3.9%. These will be the highest hikes in percentage terms out of any of the major broadband or mobile firms. The alternative for those under contract is an exit fee and these can be exorbitant. Which? analysis shows that if average customers were with both Virgin Media and O2, they could face a combined exit fee as high as £692.37 if 12 months were still remaining on their contracts. Since the companies merged, Virgin Mobile customers have been migrated to O2 and the providers began offering bundled deals. Based on responses from Which?’s latest broadband survey and analysis of mobile market data, the consumer champion has also calculated how much an in-contract Virgin Media or O2 customer could see their payments rise by. This is despite Which? calling for telecoms firms to halt plans for price rises, and Ofcom proposing a ban on inflation-linked price hikes. Virgin Media customers face the largest hike - both as a percentage and in pounds and pence - out of any of the major broadband firms due to the provider’s use of RPI, which is discouraged by the ONS (it says RPI is not a good way to measure inflation as it is likely to inaccurately reflect price changes). Which?’s latest analysis has found this could result in an increase of £39.14 to the annual broadband bill of the average Virgin Media customer. The research suggests that the average Virgin Media broadband customer pays £37.06 a month, so this £39.14 figure works out as average customers paying for an extra thirteenth month. Which? calculates that if the average Virgin Media broadband customer did not want to be hit with this price hike and wanted to switch away instead, they would face an exit fee of £403.91 if they were to leave their contract 12 months early. The problems with Virgin Media’s unfair price hikes are compounded by woeful customer service, with Ofcom already investigating claims the company has made it difficult for customers to cancel their services. In Ofcom’s latest complaints figures (for July to September 2023), Virgin Media was also the most complained about broadband, landline and pay-TV provider. Virgin Media has also consistently underperformed in Which?’s annual broadband provider rankings - receiving just one star for customer service.
Meanwhile the average O2 Sim-only mobile customer faces a £26.44 annual price hike - this is the highest increase of any network by percentage. This is higher in pounds and pence than EE and Three, but slightly less than Vodafone which has higher prices overall on average. It is higher than the UK average of £20.76 identified by Which?’s research. O2 does note that some customers, who took out their contracts prior to March 2021, will pay increases which are RPI-only without the 3.9% added on. Which? calculates that the average in-contract Sim-only O2 customer currently pays around £25.04 a month. The average customer who did not want to be hit with this price hike and wanted to switch away instead would face an exit fee of £288.46 if they were to leave their contract 12 months early. Virgin Media has shared figures with Which? that state an average customer will see increases of £4.16 per month or £49.92 a year – however this incorporates TV as well as mobile and broadband. The company says that for O2 mobile price increases are only applied to the airtime portion of a customer’s bill (i.e. minutes, text messages and data) – not their total monthly bill. These inflation-linked price hikes come just 12 months after O2 imposed price increases of more than 17% on customers, while for Virgin Media these increases were 13.8% on average. Colin Smith, 74, told Which? that he received correspondence from Virgin Media in autumn last year informing him of a change in the terms and conditions of his contract - a new clause would enable mid-contract price rises. He has been a Virgin customer for 10 years and while he would initially have had the option to exit the contract penalty-free for 30 days when notified about the mid-contract price rise changes, he is now trapped. He said: "As a pensioner my income is fixed. When it comes to contract renewal, I'm looking at every penny. My gas and electric bills are a lot higher than they were. I've got a smart meter and can see the money stacking up. Every penny saved on broadband I can spend on heating my house." Which? believes it is outrageous that broadband and mobile providers are planning to go ahead with inflation-linked price rises this April 2024 after the regulator found this practice can cause substantial consumer harm and proposed a ban. The consumer champion is calling for all providers including Virgin Media and O2 to scrap this year's hikes and implement Ofcom's proposals as soon as possible so new customers are not trapped in these unfair contracts. Ofcom should also press ahead with its positive move to ban inflation-linked price rises which will prevent customers facing these unfair and unpredictable price hikes. Rocio Concha, Which? Director of Policy and Advocacy, said: “Virgin Media and O2 customers face a lose-lose choice between huge price hikes and crippling exit fees. This comes on top of up to 17 per cent increases faced by some O2 customers last year - few would have anticipated such steep price rises when they signed up. “Ofcom has clearly stated that the practice of inflation-linked mid contract price rise terms can cause substantial consumer harm. Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.” -ENDS- Notes to editors Full case study details Colin Smith, 74, received correspondence from Virgin Media in Autumn last year informing him of a change in the terms and conditions of his contract - a new clause would enable mid-contract price rises. He has been a Virgin customer for 10 years and while he would initially have had the option to exit the contract penalty-free for 30 days when notified about the mid-contract price rise changes, he is now trapped. He believes that this mid-contract price rise clause is inherently unfair and that Virgin Media should honour the original contract. He grudgingly accepted the change, while reserving the right to contest it at the appropriate time. He is dreading his bill potentially going up in April 2024. He is currently paying more than £29 per month for his TV and broadband deal, and is on an 18-month contract which ends in summer 2024. Colin said: "As a pensioner my income is fixed. When it comes to contract renewal, I'm looking at every penny. My gas and electric bills are a lot higher than they were. I've got a smart meter and can see the money stacking up. Every penny saved on broadband I can spend on heating my house." He has complained to Ofcom regarding the Virgin Media clause of mid-contract price rises and is awaiting a response. Right of reply A Virgin Media O2 spokesperson said: “2023 was a record year for traffic on our networks as customers used our mobile and broadband services more than ever. We are investing heavily to ensure we continue to provide the fast and reliable connectivity our customers rely on, and the amount we receive from price increases is greatly outweighed by the £5m we invest every single day to upgrade our networks and services to give customers a better overall experience. “Which?’s own analysis shows that we continue to offer excellent value, with cable customers paying an average of just 10p more per day, and mobile customers facing an effective average increase of just 5p a day, for services they’re using almost constantly. This is further backed up by recent independent analysis which found that the cost of telecoms services has fallen by a fifth since 2017, while at the same time speeds and usage have increased significantly.” Methodology for broadband Price increases Impact of annual price rise for average Virgin Media customer: £39.14 This increase is the largest (in £) of all major providers - Which?’s research shows Virgin Media customers pay one of the largest amounts on average - and they face the largest percentage hike due to the provider’s use of RPI (discouraged by the ONS). Which?’s average is based on the average amounts paid by customers in a December 2023/January 2024 survey of 3665 people who had a contract for a home broadband service (including broadband and phone). Data includes a nationally representative sample. Which?’s figures are for broadband/broadband & phone customers - TV/triple play is not included Exit fees Potential exit fee for Virgin Media customer with 12 months remaining: £403.91 Virgin Media previously had an exit fee cap (of £288) but this is only for customers who took out a deal prior to 4 April 2023. Given its contracts last 18 or 24 months, a customer with 12 months remaining could have taken out a deal after the cap was removed. Virgin Media calculates its exit fees as follows:
Which?’s analysis shows that £403.91 will be the highest 12 month exit fee faced by customers of major broadband providers - the next highest was £222 for Shell Energy Broadband. Methodology for mobile Price increases Impact of annual price rise for average O2 customer: £26.44 This is the highest increase of any network by percentage, and higher in pounds and pence than EE and Three (but slightly less than Vodafone). It’s higher than the UK average of £20.76. Which? estimated the average price of a new sim-only contract using a market database and weighted using Ofcom data on providers' market share and the amount of data individuals have with their contracts. The data collected was on 16 February 2024 and does not include out of contract prices. Exit fees Potential exit fee for average O2 customer with 12 months remaining: £288.46 O2 calculates its early termination fees as follows: monthly tariff cost, multiplied by the number of months remaining in your Minimum Period, minus 4%. £25.04 average cost per month Multiplied by 12 = £300.48 Minus 4% (£12.02) Exit fee = £288.46 Most contracts last 24 months, though 12 month and rolling (30 day) options are also available. Note Please note that exit fees may also sometimes be waived or are not payable in individual cases, for example where there have been persistent faults with the service or where the provider is in breach of another significant term of the contract. |