Ofcom introduces one-page pricing information rule

Ofcom introduced new rules in June 2022 requiring communications providers to give customers a one page document explaining the pricing terms and conditions¹. The regulator also issued guidance setting out additional transparency requirements on advertisers, which applies from December 2023¹.

The rules followed a period in which in-contract price rises became a common feature of broadband and mobile contracts. Ofcom revised its guidance on price rises within fixed term contracts for landline, broadband and mobile services in 2013, deciding that ad hoc increases would be treated as a contract modification, giving consumers the right to exit without penalty, while planned rises written into terms and conditions would not be considered harmful¹. Providers then adopted CPI and RPI-linked rises each April, and from 2020 began applying above-inflation increases of between 2.9% and 3.9% on top of CPI¹.

During the April 2023 price rises, many customers found their monthly bills increased by up to 17.3%, as the CPI rate announced in January was 10.5% and the RPI rate 13.4%¹. Ofcom's Affordability Tracker found that around three in ten households surveyed in April 2023 had difficulty affording a communications service, equivalent to about 8 million UK households¹.

Research published by Which? in October 2023, based on an online survey of 4,004 broadband bill-payers conducted from 2 to 20 June 2023, found that 78% of respondents believed increasing the cost of a service during a contract is always unfair, while 51% knew that CPI or RPI measure the rate of inflation and 25% could calculate how much a monthly price would be affected by an inflation-linked in-contract rise¹. The report estimated that people are prepared to pay £3.54 per month to avoid inflation-linked in-contract price rises and £3.42 per month to avoid ad hoc rises, and put the total certainty premium from fixed prices in domestic broadband contracts at £710 million, of which £514 million relates to inflation-linked rises¹.

Why it matters for households

The one page document applies at the point of signing up, so households taking out landline, broadband or mobile contracts are given the pricing terms and conditions in a single page rather than across a longer set of documents¹. The advertising guidance that applies from December 2023 places additional transparency requirements on advertisers¹.

The rules sit alongside contract terms that allow providers to raise prices mid-contract. Because inflation-linked and ad hoc rises are written into terms and conditions, they are not treated as contract modifications, so customers do not have the right to exit without penalty when they take effect¹. The Which? research found that many customers faced increases of up to 17.3% on their monthly bills in April 2023, described as as much as £113 per year for an average customer¹. It also reported that consumers struggle to understand price variation terms: only half knew what CPI or RPI measure and only a quarter could calculate the effect of an inflation-linked rise on a monthly price¹.

The report estimated the value consumers place on price certainty, finding a willingness to pay of £3.54 per month to avoid inflation-linked in-contract rises and £3.42 per month to avoid ad hoc rises¹. It noted that the estimates were made at a time of relatively high and volatile inflation and are prudently interpreted as a reasonable upper bound¹. The research covered broadband contracts only, and the report said findings would be expected to be qualitatively similar across broadband and mobile markets¹.

What happens next

The advertising transparency guidance applies from December 2023¹. The Which? report, published in October 2023, said it expected the evidence to be valuable to anyone seeking to understand the potential benefits to consumers of a change in market rules that would prohibit or restrict unpredictable in-contract price rises in mobile and broadband markets¹. No further Ofcom measures beyond the June 2022 rules and the December 2023 advertising guidance are reported in the available material.