Millions of broadband customers trapped between price hikes and exit fees of over £200

New research shows that many broadband customers are trapped in a lose-lose situation where they either have to accept exorbitant mid-contract price increases or pay exit fees of over £200.

With millions of households facing higher broadband bills, courtesy of annual price rises introduced by several of the UK's major providers, Which? is calling on telecoms firms to put the power back into the hands of consumers and let them leave without penalty if they increase prices mid-contract. 

The annual price rises are in most cases based around the Consumer Prices Index (CPI) rate of inflation as published in January – that CPI is 10.5%. These are baked into consumer contracts meaning millions of customers face a lose-lose choice between accepting exorbitant price rises or paying punitive exit fees. 

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Broadband providers and mid-contract price hikes

Several major broadband firms, such as BT, EE, Plusnet, Shell Energy, TalkTalk and Vodafone, raise prices every April in line with the consumer price index (CPI as published in January), plus an additional 3.0% to 3.9%, depending on the provider. Most affected customers will see their price increase by over 14% as a result. 

Given many of these customers already saw their broadband bills increase by nearly 10% last year, this is another blow for those looking to keep spiralling costs under control.

These mid-contract price increases are applied to affected customers' bills even if they're within their minimum contract period, leaving them with little choice but to accept them. This is because they're included in the T&Cs – providers have to let you know that your price will rise when you take out a new contract. 

But broadband contracts typically last either 18 or 24 months, so it's difficult to predict what the actual price rises will be when you sign up. 

Many customers also stay on with the same provider after their contract ends, meaning the amount they pay will continue to creep up year after year.

How much could broadband prices increase?

We've used figures from a survey of nearly 4,000 broadband customers to calculate the annual impact of these price rises for the average customer of each provider.

^{*Shell Energy Broadband reserves the right to increase prices by CPI plus 'up to 3%'}

BT Group, which includes BT, EE and Plusnet, has already announced that it won't intervene and will go ahead with price rises of 14.4% for the vast majority of its customers, including those that are out of contract. 

Read 10 ways to save money on broadband and TV bills for more advice on reducing the cost of your service, plus check our latest cost of living news.

Your only other option? Pay an excessive exit fee

Ofcom rules state that telecoms providers must offer their customers the right to exit their contract penalty free if they surprise them with unexpected price rises.

Unlike the price rises announced by other providers, these annual price rises are part of your contract meaning they don't qualify under these rules. You have no choice but to pay the new higher price, or to pay an eye-watering exit fee to terminate your contract - even though the price rises are based around inflation figures you have no way of predicting when you first sign up.

Given the cost of living crisis, we don't think it's fair that the only way consumers facing price rises can switch to a better deal is to pay exit fees that can cost hundreds of pounds. We calculated the exit fee the average customer of each provider with 12 months remaining on their contract would face. 

• BT: £219.04
• EE Broadband: £150.49
• Plusnet: £144.75
• Shell Energy Broadband: £160.20
• TalkTalk: £122.40
• Vodafone: £123.72

Providers should allow customers to switch away

A Which? campaign is calling on essential businesses, including telecoms providers, to help consumers grappling with the impact of the cost of living crisis. Like supermarkets and energy companies, telecoms providers must pull together to create a fairer market, and help those struggling with the financial and emotional impact of rising prices.

We're calling on all broadband providers to allow customers to leave their contract and switch to another provider without penalty if prices are hiked mid-contract - regardless of whether or not these increases can be said to be 'transparent'.

Given the current economic circumstances, we've also called for all providers to carefully consider what level of mid-contract price increases are justified.  We also want 2023 mid-contract price rises to be cancelled for financially vulnerable consumers. This should apply to those consumers known to providers and all those who are eligible for social tariffs, but have not yet taken one. Providers should work with government and Ofcom to identify these customers using all data available to them. 

Providers have cancelled and postponed price rises before. KCOM cancelled its planned mid-contract price rises for 2022, saying it didn't want to add to the burden of rising costs that consumers were already facing. Shell Energy Broadband postponed its 2022 price rises and increased prices a lower amount than it allows for contractually when these did go through.

Rocio Concha, Which? Director of Policy and Advocacy, said:

 'It's hugely concerning that scores of broadband customers could find themselves trapped in a lose-lose situation where they either have to accept exorbitant - and often difficult to justify - mid-contract price hikes this Spring or pay costly exit fees to leave their contract early and find a better deal.

'Which? is calling on providers to let their customers leave without penalty if they face mid-contract price hikes. Providers should also carefully consider the level of any price rises when many consumers are already under huge financial pressure.

'With many households struggling to make ends meet, it is completely unfair that people are trapped in this situation. Telecoms providers need to step up and play their part to support their customers through the cost of living crisis.'

What should I do about the broadband price rises?

If you're out of contract, keep in mind that you don't have to accept any price rise – you're free to shop around to find a better deal. In many cases you'll find that it will save you money, and you may get a better service. But check the T&Cs of any new contract carefully so you're aware of your new provider's policy on price rises.

Luckily not every provider employs this somewhat sneaky pricing strategy - some commit to keep your prices the same for the duration of your contract. Hyperoptic, SSE and Zen Internet all promise not to raise prices during your minimum contract period.

While Sky is raising the prices for many of its customers this year, it has avoided clauses covering above inflation rises in contracts - thereby allowing its customers to haggle or switch when notified of such hikes.

Virgin Media previously followed the same principle, but it recently announced it will introduce inflation-based increases in its broadband contracts from 2024.

If you're within the minimum term of your contract and are concerned about being able to pay a higher price, get in touch with your provider. If you're eligible for a social tariff, your provider should allow you to switch to one. 

If you're not eligible for a social tariff, your provider will take other steps to help you with your bills - read more about the things providers can do to offer support for customers struggling with their broadband bills.

Discover which providers we recommend in our round-up of the best and worst broadband providers.

How the providers responded

BT told us it expected the average customer to see the price rise around £1 per week and that it won't affect all customers. It said the price rise model it uses for BT, EE and Plusnet broadband customers is transparent, rather than unexpected or inconsistent. It said it was balancing its own rising costs and making investments in UK digital infrastructure. Customers who are struggling financially and are eligible for Home Essentials can move penalty-free at any point in their contract (this also includes EE and Plusnet customers).

Shell Energy Broadband told us its terms allow for a price rise no higher than CPI+3% and it will confirm any price increase with customers. It recognises the budget pressures faced by customers and will assist those who need it with payment plans, a cheaper tariff or via a fund for the most vulnerable.

TalkTalk told us a key reason for it introducing the price rises is that Ofcom has regulated that wholesale prices can go up by CPI. These wholesale costs make up a majority of its cost as a business, plus it has also seen other cost increases (such as the cost of electricity) and has no choice but the pass these cost increases onto its customers. A spokesperson said 'This regulated CPI-linked price rise is preventable. There is still time for Ofcom to act and reduce the wholesale price increases that lead to these price rises. These are exceptional circumstances, and families and businesses across the UK need the regulator to act.'

Vodafone declined to comment.

Our research

Our price rise projections are based on the average amounts paid by customers in a December 2022/January 2023 survey of 3,975 people who had a contract for a home broadband service (including broadband and phone). Data includes a nationally representative sample plus a provider boost approach for brands with low sample sizes.

Price rise exclusions will apply for social tariffs and some financially vulnerable customers. 

To calculate the exit fees payable for broadband consumers, we took a hypothetical consumer who has 12 months remaining on their contract at the point where prices are set to rise. This makes the figures for annual price increases and exit fees comparable.

Our calculations for BT, EE, Plusnet and Vodafone are all based around exit fees faced by a customer paying the average amount as per our survey. For these companies, we followed the example calculation for early termination charges displayed on their website. To get representative figures, we substituted in our average price paid per provider, and scaled the business cost savings deducted according to the difference between this price and the example price. TalkTalk and Shell Energy Broadband have fixed exit fees which were calculated for a customer with 12 months remaining at the point where prices rise.

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