Virgin Media and O2 face choice between mid-contract price rises or large exit fees, claims Which?

Broadband, Telecoms

Virgin Media and O2 customers face being trapped this April as they are presented with a choice between huge mid-contract broadband and mobile price rises or crippling exit fees, according to Which?’s research.

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 to pay an exit fee. 

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.

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). 

The problems with Virgin Media’s unfair price hikes are compounded by woeful customer service, claims Which?, 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.

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. 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.

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.

Says Rocio Concha, Which? Director of Policy and Advocacy:

“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.”

Adds A Virgin Media O2 spokesperson:

 “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.”

Chris Price
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