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Ofcom to act on mobile contract price increases

Mid-contract price increases to mobile phone tariffs could soon be a thing of the past, as Ofcom looks to clamp down of network price rises, proposing that customers should be able to instead leave penalty free.

One of the most frustrating things for mobile phone users are prices rises inflicted by mobile operators, usually when you are part of the way through a 24-month or 12-month contract. Currently consumers can complain about price rises – but have to prove that the price increase will cause ‘material detriment,’ which is really hard.

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Following a review, during which over 1600 complaints were examined Ofcom has today launched a consultation.

Ofcom is proposing to allow customers to withdraw from a contract without penalty, if price increases occur during the contact term. Networks will be able to increase prices during a fixed-term contract, but they have to be transparent about any potential price increases. Ofcom stopped short of banning price rises within fixed contracts.

According to Which all the major mobile providers have creased prices during fixed-term contracts – totally almost £150 million a year.

Claudio Pollack, Ofcom’s Consumer Group Director, said: “Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts”

Vodafone is the first network to respond: “We support Ofcom’s desire to give consumers reassurance about the prices that they will pay during their contract, but the regulator’s proposals risk generating significant confusion and potentially increasing the cost of getting a mobile phone contract for millions of people.”

“Under Ofcom’s proposals new customers, meanwhile, could find themselves paying different prices for different services depending on which third party has recently increased its prices. At a time when both the regulator and consumer groups are calling for prices to be simpler to understand, Ofcom’s proposals could take the industry back to a time when consumers were faced with a bewildering array of prices for calling different numbers.”

Ofcom itself admits that if its proposals are carried out, they could result in the up-front cost of using a mobile phone actually increasing as mobile phone operators will have to try and second guess what price increases third parties will attempt to introduce.”

Ofcom is expected to publish a decision in June 2013, following consultation with stakeholders.

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