Make sure you read the terms carefully when you take out a new broadband deal: there's a growing trend for some providers to sneak in new clauses promising significant mid-contract price rises.
The four BT Group brands - BT, EE, Plusnet and John Lewis - have now all announced new policies to allow bigger price hikes on their deals. They will see annual increases equal to the consumer price index (CPI) inflation rate - plus an extra 3.9% on top.
Previously, ISPs would typically peg their rises to the CPI, or in some cases promise none at all.
Plusnet, for example, have effectively replaced their heralded fixed price guarantee with the guarantee of at least one - and potentially two - price rises over the course of a broadband deal.
BT, meanwhile, no longer offer contracts shorter than the two-year maximum that Ofcom allows. That means you'll be paying at least 7.95% more at the end of your deal than you were at the start.
Here's what they've announced:
- BT and EE are using the CPI published every January. The price rises go into effect from 31st March each year, and apply to customers who signed up after 1st September 2020.
- For the 2021 increase, Plusnet and John Lewis are using the CPI published in April and applying the increase from 1st June. After that, they're using the CPI published every January, and adding the increase to bills from 1st March. It affects customers who signed up from 7th October.
If you're on an older deal and still within your initial contract period you won't be affected by these changes until the time comes for you to renew. If you're out of contract you will be affected, although you should never stay on an out-of-contract deal for long.
So how much more will you be paying? For reference, the CPI rate for December 2019 was 1.3%, so that's the rate by which your price would have gone up on most deals. Under the new policy, that increase would have been a hefty 5.2%.
The Bank of England's target for the CPI is even higher at 2%. Of course, with the uncertainty that comes from the UK being in the middle of the biggest economic slump in 300 years, it's hard to predict what that rate will be in future. Needless to say, negative inflation won't result in a discount as that 3.9% will stay in place regardless.
What can you do?
Ofcom rules state that you can quit your contract without penalty if your broadband provider introduces "unexpected" mid-contract increases. But by announcing these plans, and writing them into your contract, they won't be classed as unexpected, so there's no escape.
What you can do instead is ensure you factor in the changes in your monthly charges when you're comparing broadband deals. And also keep in mind the date you sign up. If you take out one of these deals in February or March you'll be hit by an immediate price hike.
This move makes genuine fixed price guarantees more valuable than ever, especially if you're signing up for longer than 12 months. TalkTalk, italk and SSE are among the suppliers still offering them, so if you want clarity over what your bills will look like over the next couple of years they're worth checking out.
If you're ready to find a better deal on your broadband, use our postcode checker to see what's available in your area.
Posted by Andy Betts on in FeaturesNewsEEBTJohn LewisPlusnet