Mobile phone firm Three has backtracked on a promise to never put up prices mid-contract by telling new and upgrading customers that they face an annual price hike.
The mobile phone operator quietly changed its terms and conditions on 29 May, meaning that new customers or those that upgrade on or after this date will be subject to an annual price rise in line with increases in the retail price index.
Three said the change had been made because it was “still common practice” in the rest of the industry.
The rise will affect pay monthly mobile and broadband customers, with the first increase expected to appear on bills in May 2016 based on the April RPI figure.
The firm said based on previous RPI figures, a customer who had signed up to pay £25 a month could see their bills go up by 50p a month. Existing customers who do not change their phone will not face an increase.
Three told the Guardian that customers would be informed about the annual price change when they signed up to a new contract or upgrade.
A spokesperson said: “We know mid-contract price increases are frustrating but as they are still common practice and we operate in one of the most competitive mobile markets in the world, we have reviewed our approach.
“In the present market, we feel reintroducing mid-contract price increases for new contracts signed on or after 29 May is the best way of maintaining investment in our award winning network and of offering benefits which customers really value, like 4G and roaming at no extra cost in 18 countries.”
In January 2014 Three promised it would not increase prices at all, following Ofcom’s guidelines aimed at stopping mid-contract hikes.
At that point the telecoms regulator, Ofcom, ruled that customers could cancel their mobile contract if a network decided to increase the cost of their line rental part way through a fixed-term contract, but this included a loophole that allowed operators to raise prices in line with inflation.
At the time, Three said it would not raise fixed monthly fees during a contract.
“We support Ofcom’s approach to fixing the price for pay-monthly contracts for their duration. We think it’s only fair that customers should have clarity around costs when they sign up to a contract.”
Three’s change leaves Vodafone as the only major network in the UK not to impose mid-contract price hikes, with O2 and EE already including a similar clause in their contracts.
In March both EE and O2 announced increases to contracts of 1.1%, in line with the February RPI figure.
Asked about Three’s contract changes, a spokesperson for Ofcom said: “Our guidance is designed to ensure consumers and small businesses have better protection against unexpected price increases.
“The importance of the core subscription price in a customer’s choice of contract means it should be abundantly clear to them what the price offered and agreed is. The customer should be able to compare offers, make informed decisions and rely on the price agreed.
“Where tiered contracts are offered, providers must make the terms, conditions and prices clear and prominent to the customer at the point of sale so that customers understand the nature of the contract they would be entering into.”
Rob Kerr, mobiles expert at uSwitch.com said the U-turn was frustrating.
“Ofcom has taken significant steps to protect mobile users from mid-contract price hikes, but opportunities to put up monthly fees clearly still exist and customers continue to experience annual price hikes at the hands of mobile operators.
“Some networks now make it clear when customers sign up that they will increase their prices in line with RPI once a year. But, in doing so, it’s very hard for customers to leave their contract without penalty when this inevitably happens.”
