After O2 unexpectedly introduced it was elevating costs by £2.50 a month, the federal government has requested the media regulator to rethink its guidelines on telephone firms elevating costs mid-contract.
Technology Secretary Liz Kendall mentioned O2's larger-than-expected worth rise was “disappointing given the current pressure on consumers”.
“I believe we need to move more quickly. I want to see us increase contract prices again,” she mentioned in a letter to the media regulator.
Ofcom mentioned it shares the federal government's concern that “customers facing price rises must be treated fairly by mobile providers”.
O2 mentioned in an announcement: “We appreciate that a price change is never welcomed, but we have been fully transparent with our customers about this change, writing to them directly and providing the right to opt out without penalty if they wish.”
Ofcom has been given till November 7 to answer Ms Kendall's letter, and has mentioned it’ll reply to her particular questions shortly.
In January, new guidelines got here Which cracked down on telephone and broadband suppliers who raised costs mid-contract with out warning.
However, final week O2 introduced that it could Raising its month-to-month costs greater than initially promised.
It was in a position to do that as a result of the rise was not tied to inflation, and it gave clients 30 days to go away with out penalty – so long as they paid off the total worth of their gadget.
The firm mentioned it didn’t go towards regulation and that Ofcom's guidelines don’t stop suppliers from elevating costs.
“The price increase equivalent to 8p per day is on top of the £700m we invest each year in our mobile networks, giving UK consumers the benefit of a highly competitive market and the lowest prices compared to international peers,” it mentioned.
Ms Kendall mentioned in her letter to Ofcom chief government Dame Melanie Dawes that O2 was “against the spirit” of the foundations.
They have requested Ofcom to have a look at whether or not a 30-day switching interval would make it simpler for shoppers to maneuver to a different supplier.
“I would welcome your undertaking to conduct a rapid review of how easy it is for customers to change providers,” she mentioned.
“If companies are determined to increase pricing, it is up to us to make sure customers can go elsewhere as easily as possible.”
They have additionally known as for an evaluation of whether or not the January guidelines give shoppers sufficient transparency into worth will increase through the course of their contracts.
Ofcom guidelines require firms to inform clients how a lot their payments will enhance in kilos and pence earlier than contracts begin.
O2 initially mentioned its month-to-month costs for present clients would rise by £1.80 a month in April 2026.
But the corporate now say they are going to enhance it by £2.50 as a substitute.
Ms Kendall mentioned she wished telephone suppliers to tell all their clients – together with these whose contracts began earlier than the brand new guidelines – how a lot their month-to-month costs would enhance.
“We have always said that fixed should mean fixed,” mentioned Tom McInnes, coverage director on the Citizens Advice charity, including that the present guidelines “do not go far enough to protect customers”.
“If one company is able to get away with it, other providers may follow suit,” he mentioned.
“It's time for regulators to stop mid-contract price gouging once and for all.”
Meanwhile, Paolo Pescatore, telecoms analyst at PP Foresight, mentioned UK community operators had been “suffering from cash crunch as margins remain tight”.
He added: “Striking the right balance between raising much-needed funds and investing in next-generation networks is never easy.”
But he mentioned that whereas different suppliers would sometimes announce related worth will increase, “given the consumer response and awareness generated so far, it is highly unlikely that rivals will follow suit”.
With inputs from BBC