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Sorry if this is posted in the wrong. Forum. I thought I had read somewhere that the yearly compulsory price increases were to be stopped. Is this true or have I mislead my self. Thanks
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Not stopped, but required to be communicated more clearly and openly.
Instead of percentage increases linked to CPI, the big providers have been moving to fixed annual increases specified in pounds and pence. Their offers now include text like “price increases £3 annually every March”
-==-
DougM
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This link should explain the state of play from January next year.
Existing contract are not impacted.
ofcom statement
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Register (or login) on our website and you will not see this ad.
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Have been seeing £3 typically - with CPI down at 2-2.5% plus 3.9% giving 6.4% which on a £30 contract is about £2, consumers are going to lose out with the simplified method.
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M H C
taurus excreta cerebrum vincit
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In my view the only fair way is to have a fixed price for the duration of the contract or no contract (i.e. 30 days notice).
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I do agree, I'd rather pay the install charges and get a 12-month contract, then the provider gets to re-assess what they want to charge me a year later. If they don't feel they can predict their own costs 24-months out then don't put me on a 24-month term.
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Have been seeing £3 typically - with CPI down at 2-2.5% plus 3.9% giving 6.4% which on a £30 contract is about £2, consumers are going to lose out with the simplified method.
Come, come, MHC. As a longtime contributor did you REALLY think it would work out any other way?
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Have been seeing £3 typically - with CPI down at 2-2.5% plus 3.9% giving 6.4% which on a £30 contract is about £2, consumers are going to lose out with the simplified method.
Come, come, MHC. As a longtime contributor did you REALLY think it would work out any other way?
NO. Deep down, I knew what would happen.
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M H C
taurus excreta cerebrum vincit
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The providers should be forced to give a headline figure which is the *average* monthly cost over the contract term, not the initial price.
If they did that, there would be no incentive to tail-load the pricing as they do.
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Have been seeing £3 typically - with CPI down at 2-2.5% plus 3.9% giving 6.4% which on a £30 contract is about £2, consumers are going to lose out with the simplified method.
They attempted to hold the banks account with charges, but the result was the charges where worse than before.
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And in both cases, what was there was openly explained, but people chose to ignore it.
OfCom defined the RPI+3.9% - to get TelCos back making money when previously they were very tightly constrained
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M H C
taurus excreta cerebrum vincit
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As has been said, existing contracts not affected, and new ones still allow it, but has to be quoted as a fixed amount increase instead of variable so consumers are not confused.
Ideally they would allow increases when out of contract but not at all when in contract, but Ofcom will always consider those they are regulating, arguably they are potentially in "regulatory capture", so effectively they have changed the rules to satisfy those calling for inflationary increases to be banned but left it possible to still do in contract rises to keep those they are regulating happy.
Edited by Chrysalis (Fri 13-Sep-24 07:02:01)
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The idea here is that there should be some competition on the annual increase, so if BT say £3 and Vodafone say £2 you are able to factor all that in for the term of the contract. I prefer to go with companies that don’t do annual increases.
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(Goes into supermarket)
Me: "I saw your sign, 'Jaffa Cakes from only 10p'. I'd like to buy some please."
Shop: "Certainly. They come in boxes of 24. You can't buy any fewer than that"
Me: "That's fine. So that's £2.40 then?"
Shop: "Well, no. It says 'from' 10p. The first three jaffa cakes in the box are 10p each. The next twelve are 13p each. And the remainder are 16p."
Me: "Ermm, OK, how much is that then?!"
Shop: "Oh, don't worry about that. Just hand me your credit card and I'll charge you the right amount..."
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(Goes into supermarket)
Me: "I saw your sign, 'Jaffa Cakes from only 10p'. I'd like to buy some please."
Shop: "Certainly. They come in boxes of 24. You can't buy any fewer than that"
Me: "That's fine. So that's £2.40 then?"
Shop: "Well, no. It says 'from' 10p. The first three jaffa cakes in the box are 10p each. The next twelve are 13p each. And the remainder are 16p."
Me: "Ermm, OK, how much is that then?!"
Shop: "Oh, don't worry about that. Just hand me your credit card and I'll charge you the right amount..."
TBH , this isn’t a great analogy, to compare buying anything on a contractual basis with a minimum term to a purchase of a grocery item in a shop is unrealistic , but even then it’s presented inaccurately,
To more closely reflect the pricing structure of broadband ( presumably that’s the intention) , the Jaffa Cakes wouldn’t be advised as ‘ from 10p’ , it would say 10p , and the fact that the 10p price isn’t fixed for ever , or even 24 months would be highlighted prominently, also the increase wouldn’t be from 10p to 13p ( a 30% increase ) it would be to 11p ( that’s a more reasonable expression of the relative broadband increase using a worse case broadband scenario, if you bought a bigger box, so more Jaffa Cakes to enjoy , the increase is still only 1p)
The conversation would be more like , You , ‘how much is a Jaffa Cake ? ‘ ,
Shop ‘ they are 10p , but in March next year they will be 11p and the March after that 12p ,
You haven’t had any calculation to make to know the price going forward is , it was presented at the point of sale , it up to you to proceed or take your Jaffa Cake purchase elsewhere, there are lots of outlets to buy them , in fact there may be a shop that sells them today for 11p or 12p , but guarantees not to increase the price for 24 months provided you buy one each month , there may be a shop that sells them for 9p and guarantees to not to increase the price for 24 months provided you also do the rest of your weekly or monthly shop with them , or various other incentives to buy a Jaffa Cake from them , some shops will sell a generic version of a Jaffa Cake , similar packaging, similar ingredients, but it’s not a Jaffa Cake , it may be called a Jiffa Cake to keep the legal side of the business happy , that’s what we supposedly want , a free market with choices ,
Edited by Iniltous (Sat 14-Sep-24 10:25:48)
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TBH , this isn’t a great analogy, to compare buying anything on a contractual basis with a minimum term to a purchase of a grocery item in a shop is unrealistic , but even then it’s presented inaccurately,
....
The conversation would be more like , You , ‘how much is a Jaffa Cake ? ‘ ,
Shop ‘ they are 10p , but in March next year they will be 11p and the March after that 12p , ...
Actually, I think it is a great analogy, with the month by month ISP payment corresponding to a pack of jaffa cakes. When you buy an ISP contract, you are buying a pack and the nonsense is that the price changes as you go through the pack.
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Now try to convince the supermarket to sell you a pack of Jaffa Cakes once a month for the next two years and guarantee you that the price stays the same every month.
Oliver.
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TBH , this isn’t a great analogy, to compare buying anything on a contractual basis with a minimum term to a purchase of a grocery item in a shop is unrealistic , but even then it’s presented inaccurately,
....
The conversation would be more like , You , ‘how much is a Jaffa Cake ? ‘ ,
Shop ‘ they are 10p , but in March next year they will be 11p and the March after that 12p , ...
Actually, I think it is a great analogy, with the month by month ISP payment corresponding to a pack of jaffa cakes. When you buy an ISP contract, you are buying a pack and the nonsense is that the price changes as you go through the pack.
Are the Jaffa Cakes in your Supermarket the same price as they were two years ago , did the Supermarket specifically state you would pay the same for the two years after you bought the first pack ? , what obligation did you give the supermarket to continue to buy them at the same outlet for this promise not to increase the price ? , obviously you can think it’s a great analogy, but IMHO it doesn’t bare close scrutiny.
To torture this analogy further , you buy a pack of Jaffa Cakes , although in my view the analogy was purchasing one per month for 24 months , not 24 months worth of Jaffa Cakes for a one off fee , divided over the period you want to consume them over and paid in equal interest free instalments ( in the same way you can buy broadband from some vendors paying the same price each month of the term ) but that overlooks the fact that the vendor may charge more for that Jaffa Cake ( or Cakes ) in the first place compared to those bought on a visit by visit basis , to hedge against the wholesalers price increases in the price of Jaffa Cakes , or even the factory price increases.
, if bought on that basis , and they may also charge extra for ‘extras’ , like compulsory delivery of the Jaffa Cake ( the installation fee if you will) and as I pointed out , there is choice of where to buy a Jaffa Cake anyway , if you don’t like the Jaffa Cake price in your local supermarket, go to the local market and buy them from a market vendor , of course if you buy one there and get food poisoning, and when you go back to complain ( after you recover ) that vendor has gone bust , or their entire business plan was to sell dodgy products to mug punters , take their money and disappear, then a more reliable vendor may have been the better choice
Edited by Iniltous (Sat 14-Sep-24 12:49:27)
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Now try to convince the supermarket to sell you a pack of Jaffa Cakes once a month for the next two years and guarantee you that the price stays the same every month. It is more like the supermarket saying if you want to buy a pack of jaffa cakes then you must subscribe to buying jaffa cakes every month for the next 24 months but that we are going to increase the price of the jaffa cakes every year. If you don't want a contract then either we will charge much more for the jaffa cakes or you'll have to go elsewhere.
The thing with broadband though is you are probably going to want it every month and so contracts make sense from that perspective and means a provider can have certainty of income making it easier to plan ahead. But, I don't agree with baking in price rises as they could smooth that out over the 2 years of the contract and just have a consistent price (they know how much they are going to put it up by) - the only reason for doing it like they are now is to trick customers with the headline price and hope they don't really get what will happen with the rises. It also means that people who start a contract mid way between rises would actually end up paying more on average than someone that started it just after a price rise.
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The thing with broadband though is you are probably going to want it every month and so contracts make sense from that perspective and means a provider can have certainty of income making it easier to plan ahead.
Yes, I was mainly making a point that Jaffa cakes don't work as an analogy with telecom services.
It also means that people who start a contract mid way between rises would actually end up paying more on average than someone that started it just after a price rise.
I don't follow. They should pay the same rate at time of sign up / re-contracting, and will both be subjected to the annual price increase at the same time.
Edit: But even then, we don't know that the price offered six months later will be equivalent to that of the first contract. Nor do we know what price will be offered to the person with the first contract when theirs expires.
Oliver.
Edited by Oliver341 (Mon 16-Sep-24 11:50:18)
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I did provide an example of the average prices but deleted it as my post felt too complicated.
Depending on when in the cycle you sign up you may be paying a higher price for longer (sign up just after the price increase and you pay that price for 12 months, sign up just before a price increase and you may only pay it for 1 month (or less). The big question is whether the price for new sign ups goes up the same or whether they keep them lower than the people on contracts are paying (sign up deals could mean that a new sign up pays less than someone who is part way through a contract and already had a price rise).
My main point is that if on average over the contract it is going to be £31.50 rather than £30 to start then £33 then why not just charge the known average in the first place - it is to grab headlines and to mislead people who aren't as mathematically astute or wary.
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The big question is whether the price for new sign ups goes up the same or whether they keep them lower than the people on contracts are paying (sign up deals could mean that a new sign up pays less than someone who is part way through a contract and already had a price rise).
Yes, I edited my post. The supposition depends on the initial pre-rise price staying the same.
My main point is that if on average over the contract it is going to be £31.50 rather than £30 to start then £33 then why not just charge the known average in the first place - it is to grab headlines and to mislead people who aren't as mathematically astute or wary.
I don't disagree in principle. Of course there's no mandatory price increase imposed by Ofcom, and if a supplier wishes to offer a contract which is of a fixed price (maybe they do?) then they are free to do so.
Oliver.
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Of course there's no mandatory price increase imposed by Ofcom, and if a supplier wishes to offer a contract which is of a fixed price (maybe they do?) then they are free to do so.
The problem is that they're allowed to use the starting price as the headline price, and so the ISPs which don't do this are at a disadvantage.
Example:
ISP1: charges £28 per month to start, then £31, then £34
ISP2: charges £30 per month, fixed over 24 months
At signup time, ISP1 shouts "Internet £28 per month! (*)" and the customer thinks they are cheaper than ISP2 - when in fact they are more expensive overall.
(*) With tiny print says there price goes up every April - often not even saying how much. e.g. look at Plusnet's signup page: it says "Full Fibre 300, £29.99 per month, increases 31 March", but doesn't say by how much - even if you click on "Package and speed details".
Even if that were made clearer, most people couldn't be bothered to work out whether it's cheaper overall, because it means counting how many months until April, and how many months are at the end of the contract, and multiplying it all up.
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Even if that were made clearer, most people couldn't be bothered to work out whether it's cheaper overall, because it means counting how many months until April, and how many months are at the end of the contract, and multiplying it all up.
Price control efforts are wasted on people who think like that.
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Even if that were made clearer, most people couldn't be bothered to work out whether it's cheaper overall
I think the expectation will be for the people wanting a price fixed across the entire contract to pay more. It seems like something some of the more niche providers would offer, which have a higher headline price in the first place and more wiggle room to accommodate inflation/rpi increases.
Oliver.
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more wiggle room to accommodate inflation/rpi increases.
However, that's not the reason why providers are having the in-contract rises. If it were, then when the price goes up from £x to £y for in-contract subscribers, it would go up for new customers too, if it truly reflected an increased cost base over time.
What actually happens is that the prices go up for in-contract subscribers, but new subscribers are still given the lower price.
The *only* reason for giving the lower up-front price is to make the headline figure look better, i.e. to mislead the customer about the true cost they are signing themselves up to.
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If it were, then when the price goes up from £x to £y for in-contract subscribers, it would go up for new customers too, if it truly reflected an increased cost base over time.
Yes, and consumers do have to be savvy, most are realising that re-contracting in the broadband/mobile sector is a fact of life now. The same is true in other sectors, such as where a savings account starts off with a good interest rate and dwindles over time relative to newer products, or where renewal rates for insurance escalates in the second and third years for no particular reason.
Oliver.
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Simple soul's simple calculation: we pay Plusnet £29.61 per month, say £30. That's £360 per year. Pnet says it will increase prices on our two-yr contract by £3 pm, that's £36 per year. Or 10% per annum.
How many people other than public sector can expect annual pay or pension rises of 10%? Probably better than OPfcom's original gift of 3.9% + inflation.
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How many people other than public sector can expect annual pay or pension rises of 10%? Probably better than OPfcom's original gift of 3.9% + inflation.
Stick to facts.
Overall, between December 2019 and November 2023, inflation-adjusted average private sector pay grew by 2.3%, whereas public sector pay fell by 0.3%
https://www.incomesdataresearch.co.uk/resources/insi...
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Simple soul's simple calculation: we pay Plusnet £29.61 per month, say £30. That's £360 per year. Pnet says it will increase prices on our two-yr contract by £3 pm, that's £36 per year. Or 10% per annum. By my back of a fag packet calculation if you take out a contract in January you will pay £27 extra over the first year of the contract (£3 extra from 4th month) and an additional £63 during the second year (rising to £6 extra from 16th month) as prices go up on 31st March every year, so a total of £90 extra from what you would have paid if the prices hadn't changed from the original price. Can someone correct me as I'm really hoping I am wrong.
Edited by PCJM40 (Wed 18-Sep-24 22:45:17)
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How many people other than public sector can expect annual pay or pension rises of 10%? Probably better than OPfcom's original gift of 3.9% + inflation.
Stick to facts.
Overall, between December 2019 and November 2023, inflation-adjusted average private sector pay grew by 2.3%, whereas public sector pay fell by 0.3%
https://www.incomesdataresearch.co.uk/resources/insi...
Key words in this post are inflation-adjusted
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And don't forget the whopping taxpayer-funded pension contributions and benefits in the public sector, far above what the average private sector employer could afford. As for the self-employed, as I was for the second half of my working life, work three days a week, earn three-fifths of your income at the end of the month. Pensions? No employer's contribution unless you can afford to make one.
But we digress. It's a great little earner which Ofcom has handed the ISPs.
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Stick to facts.
Overall, between December 2019 and November 2023, inflation-adjusted average private sector pay grew by 2.3%, whereas public sector pay fell by 0.3%
Inflation adjusted figures are not helpful in this debate. We are talking unadjusted £'s for internet pricing, so that is what we should be talking for wage increases.
Edited by DFScale (Wed 18-Sep-24 21:40:43)
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