There are more than 80 million mobiles in use throughout the UK. Almost half of which are on contracts lasting up to 24 months. These contracts are often fixed, which means that customers can’t cancel without paying a penalty. However the small print in contracts allows the companies to put charges up or down. In the last year all providers, apart from O2, have increased pay monthly tariffs for customers on fixed contracts in the last year.

Krista Godfrey signed up to a 24 month contract with Vodafone in 2011. Fourteen months into it, Vodafone put up the price. She was one of 10 million Vodafone customers to receive a text from Vodafone about an increase in cost of their contract - even some new customers who were within just one month of their contract received this text.

Vodafone states that they can do this in their terms and conditions.

Just as most mobile providers have been increasing prices, we’ve also been hearing about them reducing benefits.

The companies often use incentives or ‘Add Ons’ to persuade new customers to sign up, or existing ones to stay loyal but these incentives are not always available for the full length of the contract.

David McWilliam signed up to Vodafone for the data traveller package. This meant that for £10 a month while he was abroad for work he could keep in touch with home – but after just one month Vodafone removed this package – replacing it with the Euro Traveller product that for the same £10 would only provide David with four days of internet use.

Meanwhile Orange pressed ahead with plans to withdraw its ‘free broadband’ offer. Those who took out monthly contracts between October 2006 and the end of 2008 were all promised the service at no charge. Some were even told that would be the case for life.

But in August, they were informed that their broadband would only continue if they signed up to an Orange landline rental - costing them £11.50 for the first three months and then £14 a month afterwards.

Richard Cook was just 9 months into a 24 month contract when the change was announced. He’s adamant he wasn’t warned this might happen when he renewed his contract.

The mobile phone providers say they’ve the right to make these changes as it’s all outlined in the terms and conditions. But are they making this clear to customers when they sign up? Our team of mystery shoppers went to find out.

Mystery Shop

 

Over the course of one day we sent our mystery shoppers to two branches of each of the top five leading mobile phone providers, posing as potential customers.

Our mystery shoppers enquired whether the price of a 24 month, fixed tariff, pay monthly contract would stay the same for the duration?

O2: Although O2 may have not increased their tariffs recently, they claimed that the price would not change for the duration of the contract , although an assistant told us that a drop in VAT might see the monthly charges decrease.

They however failed to mention the clause in their terms and conditions which state that O2 reserve the right to increase charges at any time. In the second branch we visited, we were simply assured that prices would stay the same.

Tmobile: Both of the branches of T-Mobile we visited said that the fixed term contract monthly amount would stay the same.

However a similar clause in T-Mobile’s terms and conditions states that the price per month can go up at any time. Neither of the staff in two of the branches mentioned this.

Three: Staff in both branches said yes that the amount would stay the same and in both branches they failed to mention the terms of conditions that states prices could go up at any time.

Orange: Staff members in two Orange branches also said prices would not go up.

Vodafone: Staff in both branches visited informed us that the monthly fee on a fixed term contract would stay the same. They also failed to refer us to the key clause in the terms and conditions despite us explicitly asking the question.

Commercial and Contracts Lawyer Mark Weston says, “If a customer goes in and says they want to sign up on the basis of a fixed price contract, not to be told that term can be altered and leaving the customer with the impression the price will be fixed is missing out a material piece of information and that is potentially a breach of the consumer protection legislation.”

How about ‘Add Ons’ will this remain the same throughout the contract?

In each of the stores visited our reporters also enquired about ‘Add Ons’. They crucially explained that it was one of the main reasons they wanted to take out a contract with that provider.

In all ten branches (two from each major mobile phone provider visited), not one of the shop assistants told our mystery shoppers that the add-ons could increase in price, be changed or removed.

But in the terms and conditions it says otherwise.

“The fact that you’ve got ten cases where there’s incomplete information being given seems to be evidence of some sort of systematic problem.” says Mark Weston.

Company Responses

 

A spokesperson for Vodafone says,

We are already looking at how we can improve the information that is given to customers when they join us or upgrade. We don’t hide the fact that prices can change during the term of a contract, and we understand that across our industry, mobile phone companies need to ensure that customers receive clear information; within Vodafone we have already taken further steps to ensure that we do exactly this. We are also actively engaged in Ofcom’s own work on this issue.

By providing our customers with state of the art smartphones, which are in effect mini-computers costing hundreds of pounds, we need to recoup the investment we have made. That is why we ask customers to sign contracts with a term of up to two years. But just like any business operating today we may also need to react when the day to day costs of doing business increase. If we do have to increase our line rental prices, we notify customers 14 days in advance. If the price rise is higher than inflation, we give customers 30 days’ notice and they have the right to terminate their contract without paying any additional charge.

The DataTraveller price plan at £10 a month was not a very popular offer for our customers although it is still available for people travelling outside Europe. Within Europe, it was our aim to replace this with something that would have a much wider appeal. We carried out customer research and created EuroTraveller which gives customers access to their UK price plan: they can use all their inclusive minutes, texts and data allowances whereas Data Traveller offered only a 25MB data allowance. If you sign up to it, you pay an additional £3 for each day you need to access the internet and nothing for the days you don’t. It’s worth noting that you can’t use either Data Traveller or Euro Traveller while at sea - you’ll need to wait until you’re within reach of a land-based mast. Cruise ships have an established practice of running their own maritime networks.

An Orange spokesperson says,

We would like to make clear that we continue to provide free home broadband for eligible customers, however we now require them to switch their home phone line rental to our own competitively priced service where they may actually make savings. If they face any termination charges from their current line rental provider, or receive an early payment discount, then this will be covered by Orange, as we will ensure their current monthly spend on mobile, home broadband and line rental is no more than what it is today.

Additional points:

• We would like to reassure customers that there would be no service disruption from the change and that they can keep their existing home phone number, as well as benefit from the added convenience of one point of contact for all their queries regarding home phone and broadband moving forward

• We always recommend customers review the terms and conditions of all our plans and offers and, as per the terms of the offer, we reserved the right to replace, amend or withdraw this offer on reasonable notice.

• If a customer feels unhappy with this change, they are free to cancel their home broadband contract without incurring any exit charges

A spokesperson for O2 says,

Our terms and conditions clearly state that we may increase or decrease our charges from time to time but our monthly contract prices haven’t increased mid-term - this could explain why the topic wasn’t front of mind for the store staff who were spoken to. Like many of our additional services, the International Favourites Bolt On is not contractual and can be added or removed at any time. We do give a quick summary of some of the most important terms and conditions of a mobile agreement with every connection or upgrade which highlights Charges and Price increases which may apply to a customer’s contract.

We’re sorry that this was not clearly communicated in two of the stores you visited. As a result of your findings we will be reminding our stores again that prices and additional services can always be subject to change.

A spokesperson for EE says,

We are working to improve transparency at point of sale for our customers and look forward to working with stakeholders, including Ofcom, on the forthcoming consultation that will commence in December.

A spokesperson for Three says,

Price increases are never welcome, so this is our first for contract voice customers in our nine years of operation. It’s in line with inflation and lower than price increases from other mobile networks. To give an example, on a £15 a month contract it is a rise of just 54pence. We believe our offers remain good value.

While it’s clear operators have scope to vary pricing in line with inflation, the current rules do not offer consumers a single definition of what price changes are acceptable and what is not. This risks causing confusion, so Three welcomes efforts from Ofcom to give consumer greater clarity.