UK to ban price rises during life of phone contracts

UK to ban price rises during life of phone contracts

The UK’s telecoms regulator has opened a consultation on how to manage changes to phone tariffs during the lifetime of the initial contract. Ofcom’s proposed approach is to intervene to allow consumers to exit their contract without penalty if their provider introduces any price increase during the term of the contract.

Carriers on their end would be required to be clear and upfront about the potential for price increases and of the consumer’s right to cancel the contract in the event of any price increase. This in turn would address consumer concerns that it is unfair that providers are currently able to raise prices, while they themselves have little choice but to accept the increase or pay a penalty to exit the contract.

But there are also three other possible approaches to address price rises in fixed term contracts.

One option considers whether consumer harm could be addressed solely by tackling the current lack of transparency around the potential for price increases. Second option considers whether consumers should have to actively “opt-in” to any variable price contract. And finally, a complete ban on price rises in fixed contracts has also been considered.

The consultation closes on March 14, 2013 and Ofcom expects to publish a decision in June 2013.

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