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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