Ofcom slams O2 over unexpected rise in mobile phone contract prices
The UK media regulator has criticized O2 for raising its prices by more than it promised customers when they took out their phone contracts.
Ofcom said it was “disappointed” with the company, and said it went against “the spirit of our rules” on being transparent with customers about price increases.
In January, New rules have been introduced To prevent phone and broadband companies from raising rates in the middle of the contract without warning.
O2 said it had not contravened the regulation and that Ofcom’s rules “do not prevent companies from increasing annual price changes – for example, to invest in improving networks”.
The company said it spends £700m a year on improving infrastructure and customers can leave their contracts without penalty.
But consumer expert Martin Lewis said he was “dismayed” by the move, which “makes a mockery of Ofcom”.
He said on The Martin Lewis Podcast that he believes this will lead to other companies following suit.
“O2 customer prices are on the rise – but that likely means the door is open for all of us to see more prices now than we were told when we signed up,” he said.
O2 has told its customers they have 30 days to leave their contracts without any termination fees – although if their plan includes a mobile phone, they will still have to pay that in full.
But older and vulnerable customers tend not to switch and may miss the 30-day window, as the price rise won’t happen until April 2026, Lewis said.
On Wednesday, O2 emailed its customers to say it would increase the price of their contracts by £2.50 a month from April.
It previously announced that monthly prices would rise by just £1.80.
Ofcom said: “We have today written to the major mobile phone companies to remind them of their obligations to treat customers fairly.”
“We encourage any customer who wants to avoid this price hike to exercise their right to exit without penalty and sign a new deal.”
Ofcom’s rules were put in place to protect consumers and stop unexpected price rises in the middle of the decade.
They said businesses should tell customers how much their bill will rise “in pounds and pence” before they sign up.
At the time, Natalie Black, director of networks and communications at Ofcom, said: “Our new rules mean there will be no nasty surprises, and customers will know how much to pay and when, through clear signposting.”
But the rules only banned inflation-related price increases.
The O2 price increase is a flat fee and not a percentage of the monthly bill.
“O2 is pushing the boundaries” of regulation, said telecoms analyst Paolo Pescatore of PP Foresight.
He told BBC News: “This is very unfortunate, given that the mobile operator must focus on retaining customers in a highly volatile market.”
Mr Lewis also said he had written a letter about the matter addressed to the Chancellor, the Technology Secretary and the head of Ofcom.
BBC News has contacted them for comment.