Crackdown Urged As O2 Faces Backlash Over Steep Mobile Price Hike

O2’s surprise announcement of a steep monthly price hike has ignited calls for regulatory action, prompting the UK Government to push for greater protections for consumers. Technology Secretary Liz Kendall has formally asked Ofcom to swiftly review the ease with which mobile customers can switch providers, following news of the £2.50-a-month increase from April, equal to £30 annually. This rise is 40 percent above the £1.80 increase O2 customers had expected when signing up to their contracts.

The price hike by O2, which comes less than a year after Ofcom imposed rules to curb inflation-driven price increases in mobile contracts, has sparked widespread criticism from consumer advocates and industry experts. Renowned consumer champion Martin Lewis argued the move undermines the credibility of Ofcom’s consumer protection regime and warned it paves the way for other mobile companies to follow suit with higher-than-anticipated increases.

Ofcom’s new rules, rolled out in January, require telecoms providers to state any mid-contract price rises in clear monetary terms and to specify when these changes will take place. Previously, price adjustments were often linked to inflation indices, leaving customers uncertain about future bills. The recent O2 price hike angered many, especially given the clarity now required by regulations intended to shield consumers against cost-of-living shocks.

O2 has emphasised that its £2.50 monthly increase equates to less than 10p per day and is offset by the £700 million invested annually into its UK mobile network. The company has noted it communicated directly with affected customers and pointed out that, under Ofcom rules, subscribers impacted by the change may exit their contracts penalty-free within 30 days. Ofcom described the price rise as “disappointing” and stated it “goes against the spirit” of consumer protection regulations.

Liz Kendall has also urged the regulator to consider measures akin to those in the insurance sector, whereby existing and new customers are offered equal deals at renewal. She called for increased transparency around future price rises, especially for those still on older contracts, and welcomed further proposals to ensure fairness in telecoms billing practices.

Ofcom has confirmed it will address the Government’s queries and reaffirmed that consumers must be empowered to switch providers without sanctions if confronted with unexpected price increases not agreed upon when their contracts began.