BT axes inflation-linked price rises

BT will stop increasing prices based on percentages and the rate of inflation, following Ofcom’s proposal to ban the practice.

It said from early summer it will introduce a pricing model that uses “a clear and simple view of any changes in ‘pounds and pence’”.

BT added that it expects broadband to rise by £3 a month in future and that customers renewing their mobile contracts will pay £1.50 more.

Marc Allera, head of BT Group’s Consumer Division, said this was “about the price of a takeaway coffee each month”. He added that in “real terms” people pay less for broadband than ever before, and get “much more” for their money (see www. snipca.com/48989).

However, BT still plans to stick with the existing pricing model for the next price increases in April. This means prices will rise by 7.9 per cent – which is January’s rate of CPI inflation plus 3.9 per cent.

The company has acted before Ofcom has officially confirmed a ban on mid-contract rises linked to inflation. The regulator is currently consulting with interested parties and will make a decision this spring.

Complaints about the practice have shot up in the past year, Ofcom said.

Its research shows that only 16 per cent of broadband customers knew their monthly bill would increase mid-contract, and that it was linked to inflation plus a percentage.

Every major broadband provider except Sky has now adopted this model for calculating price increases.

Allera added that there will be no increase for “customers in financially vulnerable circumstances” who use EE Basics or BT Home Essentials.

No other internet provider has yet announced how they’ll manage price increases following Ofcom’s ban.