Ofcom urged to do more after O2 mid-contract price hike

Chris Price Telecoms
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UK telecoms regulator Ofcom is facing intense pressure to clamp down on mobile phone price hikes after O2 unexpectedly announced a mid-contract increase.

Liz Kendall, the Technology Secretary, has intervened, demanding the regulator undertake a rapid review of consumer protection in the telecoms market.

The controversy surrounds O2’s decision to raise mobile bills by £2.50 a month starting in April 2026, equating to an extra £30 a year.

This amount is 40% higher than the £1.80 increase that customers were informed of when they signed their contracts. The price rise, though relatively small on a daily basis (around 8p), has ignited a furious response from consumer groups who argue it undermines new rules designed to improve pricing transparency.

O2 is attempting to justify the increase by claiming it is necessary to fund network investment. An O2 spokesperson stated that the increase is “greatly outweighed by the £700m we invest each year into our mobile network,” and noted that the price change is permitted under current Ofcom rules.

They stressed that customers are being informed and retain the right to exit their contract penalty-free within 30 days.

However, consumer rights advocates and the government argue O2’s move defies the spirit of Ofcom’s regulations, which mandate that price rises must be set out clearly in pounds and pence upfront. Money Saving Expert founder Martin Lewis called the move a “mockery of the regulator’s consumer protection regime.”

Added Alex Tofts, broadband expert:
“What we’re seeing from O2 and price rises from other major providers is a direct result of crude regulation that has been poorly thought out, with its implications not given enough consideration.
“The only real way to protect customers is to outright ban these absurd mid-contract price hikes. Some providers already offer fixed prices, so why can’t those with the biggest profit margins do the same?

“We fully back the call for Ofcom to revisit these regulations. Until then, we urge all consumers to check whether they’re still in contract. To be fair to Ofcom, the broadband switching process has become much easier thanks to the ‘One Touch Switch’ system.

“One in three households are currently free to switch, and with many providers offering competitive new-customer discounts, now could be the best opportunity to protect your budget before further price rises take effect.”

In response, Liz Kendall has written to Ofcom’s CEO, Dame Melanie Dawes, calling for urgent action. Kendall wants the regulator to review how easy it is for affected customers to switch providers and to consider adopting a system similar to the insurance sector, where existing customers are offered the same deals as new customers upon renewal.

Ofcom acknowledged the government’s concern, stating that the price rise was “disappointing” but confirming that it will address the Secretary of State’s queries shortly.

 

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