O2 UK gives Ofcom the middle finger; ups prices and changes contract terms

Back in October, the UK's telecommunications regulator announced that it was introducing new guidance to network operators, requiring them to permit customers to exit their contracts mid-term, without penalty, if the carrier decided to increase prices. Ofcom said that it intended to ensure that consumers would "get a fairer deal", after having to deal with contracts that were skewed "unfairly in the provider's favour, with consumers having little choice but to accept price increases or pay to exit their contract."

The changes came into effect on 23 January, but one carrier has no intention of allowing the new guidelines to force it to give its customers a fairer deal. As The Guardian reports, O2 has chosen to circumvent Ofcom's guidelines, and has restructured its terms and conditions to ensure that it can increase charges every year, while leaving no room for customers to wriggle out of their contracts without penalty. 

O2's new terms and conditions state:

We will increase your Monthly Subscription Charges during March 2014 and from 2015, and each year thereafter, during April, we will increase or decrease your Monthly Subscription Charges by the RPI [retail price index] Rate and we will publish on our Website the relevant RPI Rate as soon as it becomes available (an "RPI Change"). If we do this more often and/or by more than RPI then you'll have the right to end this Agreement under paragraph 5.4."

By forewarning customers of upcoming price rises as part of the contract, before they sign up, O2 has found a loophole in Ofcom's guidelines, allowing them to increase charges annually while ensuring that customers remain powerless. This means that customers who sign up for two years could potentially see their prices increase twice during their contract period. 

Should O2 decide to increase prices more than once per year, or by more than the RPI Rate, customers would still be entitled to abrogate the contract and walk away without penalty. 

To celebrate its victory over Ofcom, O2 announced that all of its customers, old and new, will be treated to a 2.7% price increase on their contracts, which will come into effect on March 1 2014. Just to make sure that no-one gets any fanciful ideas about jumping ship, the company made it clear in FAQs on its website that "an increase of this kind does not entitle you to end your agreement mid-contract." 

A spokesperson for Ofcom said that O2's actions were permissible, as long as customers were clearly made aware of the contractual price increases before they sign up, adding: "Ofcom will conduct research, such as mystery shopping, to assess the transparency of contractual information given to customers by providers at the point of sale."

But at least one UK operator won't be giving Ofcom's new guidelines - and consumers - the middle finger. As Pocket-lint reports, Three - which recently launched its 4G services in the UK at no extra cost to customers - has stated that it will be sticking to the spirit of Ofcom's rulings in the interests of fairness to its customers: 

Your fixed monthly recurring fee from Three will not go up in the minimum term of your 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."

It remains to be seen whether other UK networks will follow Three's lead... or O2's. 

Source: The Guardian

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EU rules means Ofcom can't prevent what O2 is doing, by changing the terms and conditions to say the price WILL go up and making that clear before signing up then EU rules say you can't prevent that. However if in reality O2 staff don't tell customers the price will change each year before they sign up then O2 would be in trouble, which is why Ofcom will be keeping a very close eye on them

The O2 staff don't need to tell you every single detail in the terms and conditions, they advise you to read through them and then it's your responsibility to do so and agree to them. You don't have to do that in the shop, you have a 31 day turnaround period. If their terms and conditions are way to bloated "like apple's" either don't go with them or submit a complaint about their bloated terms and conditions.

No they don't need to go into every detail but important/key terms do have to be brought to their attention. The new Ofcom rules means that price rises can't be buried in T&Cs like they used to be, the spirit of the rule is that price rises should be fixed. You don't have a 31 day turnaround period, legally you aren't entitled to any cooling off period at all if bought in store (as it's not a credit agreement) and only 7 working days if bought online

O2 are only doing this to try keep their heads afloat.

I was lead to believe Telefonica (parent company) were close to going bust?

Yeah they are one of the few companies with the biggest debt in the word, think it was around €14.5 billion towards the end of 2013.

14.5 billion is not even close to being the largest debt in the world

Verizon here in the US has $240 billion of debt, and another $100-$140 billion off the books that is not yet realized

You have to remember, these are contracts you're signing up to. A contract is between to legal entities, both sides have a say in how a contract is written. Just amend it before you sign. Strike out any parts you don't like, and add some in yourself. If it's signed by both parties and they agree, then the contract is agreed upon. If you go in store, chances are the staff there won't even care that you've scored the contract and written in you'll be paid £100 of free credit... maybe.

Of course, you could always sign as a freeman on the land, but I don't think they'd give you contract in the first place

Ofcom's new guidelines only cover customers signing up on or after 23 January 2014. O2 was always able to increase prices for customers mid-contract who had signed up before then.

So its new terms and conditions only affect customers signing up on or after 23 January 2014 - which means that they're not changing the T&Cs for older customers. But older customers will see their prices rise anyway under their existing T&Cs. Thus, O2 is able to get away with price rises for everyone, while ensuring that everyone remains safely locked into their contracts.

Really, the only way to avoid this kind of BS from O2 is to take your business elsewhere at the earliest opportunity.

This is because Sky now owns O2's mobile division and they also bought up BeThere, one of their broadband ISPs. ..and obviously Sky are complete a**holes.

PsYcHoKiLLa said,
This is because Sky now owns O2's mobile division and they also bought up BeThere, one of their broadband ISPs. ..and obviously Sky are complete a**holes.

Yeah.... NO. As n_K points out, O2 is still wholly owned by Telefónica.

PsYcHoKiLLa said,

This is because Sky now owns O2's mobile division and they also bought up BeThere,
one of their broadband ISPs. ..and obviously Sky are complete a**holes.

Errr, wrong. Only the broadband part of O2 (including BE) was bought out by Sky last year,
the mobile phone network side of the business is currently still owned by Telefónica UK.

giffgaff ftw. I have never been on a phone contract and don't think I will ever be reading this. I don't even have a LAN phone package (but a line for internet) not worth the extra cost imho.

bucko said,
giffgaff ftw. I have never been on a phone contract and don't think I will ever be reading this. I don't even have a LAN phone package (but a line for internet) not worth the extra cost imho.

I used to be like this, but then I got a taste of 3's 3G coverage and speeds. For £3 more it's a much better overall experience.

Yup. But 3G is not a big deal to me, I got wifi most places I go to as long as I can phone people I am all good. 3G is nice if I get lost and use google maps. But my next phone will be 4G and hope my area will have 4G by the time I upgrade and hoping the price will come down somewhat in say a years time. I have read that LTE is a much stronger signal than 3G and can go through walls a lot better.

LTE in itself isn't any stronger than 3G... lower frequencies however are better at penetrating buildings and travel further distances. O2 happen to have ALL their LTE spectrum at 800MHz (Band 20) which is the lowest frequency band in use in the UK. That said it'll be a couple of years yet until 4G rollout is pretty comprehensive unless you live in a big city. I'm still waiting to see what Giffgaff's 4G offering will be, as I have the feeling that it won't be a free upgrade.

Yer 4G is a case of "wait and see" I think. I actually do live in a fairly big city and the mast near my flat is within walking distance so 4G should not be a problem. I also keep getting cards through the post about 4G tests against freeview so they must be doing something in my area and http://status.o2.co.uk/ tells me I can get 4G. Am not really bothered about the band, but the beauty of being on Pay & Go is you are not tied into a contract . I was on 02 originally before giffgaff and switching was fairly easy, it wouldn't be a problem for me to switch to 3 if I wanted to.

bucko said,
giffgaff ftw. I have never been on a phone contract and don't think I will ever be reading this. I don't even have a LAN phone package (but a line for internet) not worth the extra cost imho.

Indeed, I'm a big fan of giffgaff - but they're owned by O2, so they'll be getting your money either way!

I've been an O2 customer right from the start and it's really disappointing to see a once really awesome network turn to poo and start locking in their customers in such a way.

One of my biggest gripes about O2 is that it's become clear they've not been investing enough into their network as many people I know (in and around London) have intermittent problems with 3G where it just won't work - very, very frustrating.

On the plus side, the TuGo app is very good, it'll come in very handy as I'm moving to Australia, however, I'll be looking at $50-60/month contract over there for a sim-only contract, but at least it'll provide consistently high speed 3/4G.

Wow, reading this I just say, Thank America.

This just seems so wrong on every level. I would never EVER give my money to such a grimey trash company. They say 'will do this, will do that', but nothing about making the service better in return (any company with common sense, obviously not this one, would state it better at least and not be so dumb about it: "The service is always changing and getting better for you, the customer, but because of this, the price may go up once or twice a year"...but nope, only 'will increase your price'. Like how bad of marketing is that?? I would never in a million years give my money to someone that states it like that, "Your bill will go up every 6 months for nothing but to fill our pockets"...like wow how ignorant.

Okay, so if I was living there, this is how I would do it because if they want to jump through the loop holes, then I would too.
So the terms say "as long as customers were clearly made aware of the contractual price increases before they sign up", are there going to be cameras watching me get the 'run-down'? Recorders listing? Maybe a 1% chance (wouldn't want to make crapo2 look bad). So I would simply cancel my contract after singing up and once they said I couldn't I would file a class action suit against them suing them for not telling me about this price increase. Now this is my taking because I only know of the American legal system, but 99% of the time the Customer is right. So, I would put my foot down and sue them for not informing me, even if they did. Who and how would they prove they did? People sign contracts all the time not knowing half the info on it, because its all legal mobojumbo talk usually.

Just wow...I cannot believe how many 'will do' I read up there...only pertaining to greed, 'will take more money from you whether you like it or not, and you cannot cancel if you don't like it'. That's pathetic. Sue sue sue, put them out of business QUICK. That is not a business that should be running. Absolutely 'no customer relations' there. WHY would anyone even give them their money? Sounds like its not a monopoly at least, thank God for that you guys, otherwise I would say sue even quicker. FLOCK to 'Three' ASAP. Show crap02 when they don't care about their customers, they will have NO customers!

Oh well Prepaid for me. But I don't live in UK anyway and get robbed here by ReBellUS. So does not make any difference to me.

Well, I'll either move to another carrier or get their basic deal (last time I checked it was a 12 month £8 a month contract, unless discontinued) grab the bolt on I need and just buy whatever handset I want then.

Why OfCom didn't just say "you can't increase the price of a product during the life of the contract" to make it simple for everyone, I don't know.
Maybe that will stop mobile companies dishing out two year contracts all the time.

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