Original article ISPreview UK:
The UK Government’s Chancellor, Rachel Reeves, has today increased the pressure on the country’s main broadband and mobile providers by calling on them to “reinforce” their commitment to “treating customers fairly” by, among other things, confirming that “customers under contract will not face price rises beyond those they signed up for“.
The latest round of pressure has largely emanated from the chorus of displeasure at O2’s (Virgin Media) recent decision to increase their annual mid-contract price hikes beyond the level that customers first agreed when they signed-up (here). Some other providers have also increased the level of mid-contract price rises they apply, but O2 went further by applying this to their existing customers too.
NOTE: The Consumer Price Index (CPI) level of inflation started the year at 3% (Jan 2025) and has since crept up to 3.6%. But last year it was originally forecast to be closer to 2% by now and many telecoms providers will have set their earlier policies based, in part, on that expectation.
In fairness, O2 did allow customers impacted by this to exit their contract penalty free, which Ofcom acknowledged when expressing their own somewhat weak “disappointment” at the change last month (here). But the situation and the ongoing trend of mid-contract price hikes has caused enough consternation to attract much wider levels of criticism than usual.
For example, the Government’s Secretary of State for Science, Innovation and Technology (DSIT), Liz Kendall MP, recently joined the chorus of displeasure by directing Ofcom to “look at in-contract price rises again“ (here) and to “consider the possibility of adopting a similar regime to those such as insurance, where new and existing customers need to be offered the same deal“.
According to a new letter seen by the FT (paywall), Chancellor Rachel Reeves has now decided to weigh in on the issue by penning her own letter, alongside Kendall, to telecoms providers: “We are asking you to reinforce your commitment to treating customers fairly, including by confirming customers under contract will not face price rises beyond those they signed up for,” said the Chancellor.
However, it’s important to consider that this statement can be read in two different ways. On the one hand, it could be seen as the Chancellor making a call for mid-contract price hikes to be banned. But if we consider that the policy of mid-contract price hikes is often one that customers have to accept when they “sign-up“, then she might merely be calling on providers NOT to increase the rate for existing customers at a later date, like O2 did. In the case of the latter, this might actually be seen as a retreat from Liz Kendall’s earlier suggestion to Ofcom.
The letter then goes on to state that the government would be convening a round-table to “discuss further voluntary action to support telecoms customers”, as well as “areas that government can do more to enable the sector to drive investment in the UK’s digital infrastructure”. Sadly, the full letter has not been published and so it’s difficult to judge the detail.
At the same time, it is still important to recognise that network operators often do still have to increase prices due to costs rising in other areas, such as for service provision, regulation, energy and the need to invest in new network upgrades. At the same time, the level of inflation has remained much higher than it was previously forecast to be, which changes the risk and cost assessment that each provider has to make. But many smaller providers are still able to figure all this into fixed price contracts, and so it’s not beyond the bounds of realism for the biggest providers to do the same.
In general, we continue to think it might be better to simply ban the practice of mid-contract price hikes. Using this approach, telecoms providers could still discount the package price across your first contract term and raise prices for new and re-contracting customers, although it might prevent some other types of offers (e.g. first 1-6 months of service free).
We dare say that consumers would find general price reductions for the first term to still be both easier to understand and much easier to advertise, as well as to compare between providers, if mid-contract hikes were simply banned. Convoluted discounts are a headache when it comes to service comparisons.
UPDATE 27th Nov 2025
The full letter can now be found on DSIT’s website (we’ll paste it below). But interestingly, this now includes the following request, which the FT seems to have overlooked: “We would also like you to take proactive steps to move legacy customers onto the pounds and pence approach for price communications with no impact on the timing of planned price increases.”
The above suggestion indicates that the Chancellor may be naive to the fact that a big part of the problem is with how the new “pounds and pence” approach, while more transparent for consumers, also tends to result in customers being hit with bigger bills than the old inflation-linked method (particularly those on the cheapest plans that get hit the hardest).
The Chancellor so mentions giving consumers a “clear and accurate understanding of the quality of service they can expect from their telecoms provider“. Quite how you do that, particularly for some of the more variable mobile and broadband connection technologies (e.g. ADSL, FTTC, 4G / 5G etc.), will be interesting to see.
Dear all,
Telecoms consumer protection
Ensuring continued investment in infrastructure is a central priority for this government. It is also vitally important that consumers are treated fairly, and have confidence in the quality of service they receive. The telecoms sector is fundamental to the success of the UK’s economy and we rely on your commitment to support improved connectivity, provide access to digital services, and enable innovation.
This government has set out a long-term approach to supporting digital infrastructure, underpinned by our 10 Year Infrastructure Strategy. Our ambition is for all populated areas to have access to standalone 5G by 2030, delivered by commercial investment. We also want 99% of premises to have access to a gigabit-capable connection by 2032. We know that this must be a collaborative effort. As such, we are continuing to remove barriers to deployment of both fixed and mobile networks. We are also committed to reviewing the mobile market to ensure that, as the sector evolves, the regulatory framework remains right for investment while delivering high quality of service and fairness for consumers.
The commitments that industry has made through the Digital Inclusion Action Plan, and wider efforts, such as the provision of the lower cost social tariffs are vital in supporting vulnerable and digitally excluded consumers. However, it is clear that more needs to be done to protect all consumers. Ordinary people should feel empowered when engaging with the sector and confident they are getting a good deal.
We are asking you to reinforce your commitment to treating customers fairly, including by confirming customers under contract will not face price rises beyond those that they signed up to. We would also like you to take proactive steps to move legacy customers onto the pounds and pence approach for price communications with no impact on the timing of planned price increases.
We are also asking that you take further steps to ensure that consumers have a clear and accurate understanding of the quality of service they can expect from their telecoms provider in communications with customers, where appropriate.
We will be convening a roundtable to discuss further voluntary action to support telecoms customers, as well as areas that government can do more to enable the sector to drive investment in the UK’s digital infrastructure. Our offices will be in touch with further details, and we look forward to working together on these issues.
Yours sincerely
The Rt Hon Rachel Reeves MP
Chancellor of the Exchequer
The Rt Hon Liz Kendall MP
Secretary of State for Science, Innovation and Technology
In addition, the Chancellor has also written a new letter to Ofcom, which more specifically directs the regulator to publish its “interim review” on the impact of the newest “pounds and pence” approach to consumer pricing by Spring 2026, with a full review due in 2027. Suffice to say that if the regulator does make any changes, then it might take a bit of time to materialise.
Dear Melanie [Ofcom CEO],
Telecoms pricing and transparency
We are writing in light of recent developments in the telecoms market concerning mid-contract price rises, and the important role Ofcom continues to play in protecting consumers in this sector. This builds on correspondence you have already exchanged with the DSIT Secretary of State.
We welcome the action Ofcom took in January to increase transparency around how in-contract price changes are presented to customers entering new contracts and note your recent statement expressing disappointment with O2’s decision to increase prices. We share your concern that these price rises run counter to the spirit of your previous regulatory changes and are particularly disappointing in the context of ongoing cost of living challenges facing many consumers.
As you are aware, inflation remains a key challenge for the government, and we are determined to bear down on it wherever possible. The impact of rising costs on consumers, including in essential services such as telecoms, must be minimised.
The DSIT Secretary of State wrote to you recently requesting an assessment of the impact of the January rule change, as well as consideration of further measures to strengthen consumer protections and transparency in pricing. HM Treasury supports this approach, and we understand that Ofcom is due to publish a report in February outlining trends in switching across telecoms services, as well as data on consumer engagement and confidence in the market.
Building on this work, we would ask that Ofcom produces an interim review of the impact of the January 2025 changes by Spring 2026 with a full review due in 2027.
Separately, we would also ask that Ofcom review the suitability of the current 30-day notice period rule. Specifically, we would welcome Ofcom’s assessment on whether the current rule sufficiently enables consumers to exit their contracts at the point when a price increase takes effect. As we are sure you would agree, it is vital that customers can move to other providers as easily as possible in the face of uncontracted price increases.
This government is keen to play a convening role with industry to underline the importance we attach to these issues. We will be seeking voluntary commitments from industry to protect consumers from unfair pricing practices and would be grateful for Ofcom’s support in the coming weeks regarding this.
Ensuring fairness in the telecoms market is vital to supporting consumers and maintaining trust in the sector. Our officials stand ready to discuss these matters further, we are open to further suggestions you may have to improve consumer outcomes in this sector.
Yours sincerely
The Rt Hon Rachel Reeves MP
Chancellor of the Exchequer
The Rt Hon Liz Kendall MP
Secretary of State for Science, Innovation and Technology
