Phone, broadband and pay TV providers will be bound by new rules from 17 January 2025. (Image: Getty)
The rules come into force on Friday, 17 January, and ban phone, and pay TV providers from linking price rises to future rates of inflation, which often include an extra percentage increase on top.
Regulator said this made it near impossible for consumers to accurately estimate what they would pay and prevented Brits from shopping around and comparing deals from different providers.
This means consumers will be able to choose a contract featuring information in pounds and pence ahead of April’s annual price rises.
However, while the new rules ban inflation-linked price rises, they do still allow providers to make mid-contract increases by a fixed amount.
Ofcom explained that someone on a £30-a-month mobile phone contract might have been told their contract would increase every April by the consumer price index rate published in the previous December, plus 3.9% on top.
That wording would become: “£30 until 31 March 2025, increasing to £31.50 on 1 April 2025 and £33 on 1 April 2026”.
Last April, many deals rose by 7.7%, which is in line with the Consumer Price Index, which announced in February that it would increase by 4% plus an additional 3.9%.
Other deals rose by up to 8.8%, in line with the Retail Price Index, which was 4.9%, plus 3.9%.
Ofcom said: “As we have seen in recent years, inflation can be incredibly volatile and is difficult to predict.
“Our rules will protect consumers from bearing that risk, and ensure providers are clear about prices customers are obliged to pay over the whole contract period.”
Natalie Black, Ofcom’s group director for networks and communications, said: “More than ever, households want and need to plan their budgets.
“Our new rules mean there will be no nasty surprises, and customers will know how much they will be paying and when, through clear labelling.”
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But some consumer groups slammed the new rules, and said they did not go far enough.
Uswitch telecoms spokesman Ernest Doku said they were a: “transparency tax for consumers”.
He said: “Many providers have now opted for a blanket flat-rate annual price rise that will be even higher than the inflation-linked approach for the average broadband customer.
“So if you’re on a cheaper or average-priced contract, the luxury of knowing what your exact price rise is in advance comes at the cost of an even steeper bill hike – effectively a ‘transparency tax’ for consumers.”
Peter Ames, spokesperson for broadband comparison site Broadband Genie, said: “The supposedly tougher new regulations have actually prompted broadband suppliers to hike prices significantly.
“This also paves the way for confusion as the changes only apply to consumers on new contracts signed after January 17th.
For example, Plusnet’s £3 price is a 12% increase for customers on its cheapest packages.
“Similarly, Virgin Media’s cheapest and most popular package costs around £23 per month. So its £3.50 price rise represents a staggering increase of 15%. This is higher than the price rise we saw in 2023, at the height of inflation.
“It is sadly unsurprising that some broadband providers have seemingly used this legislation to rake in extra profits. Ultimately, the spotlight is on Ofcom.
“What we are seeing comes as a direct result of crude regulation that has clearly been ill-thought-out and the implications of it not given enough consideration.
“As ever, we believe the only solution is for Ofcom to finally abolish price rises entirely, once and for all. It’s possible for some providers to offer fixed prices, why can’t the ones with the biggest profit margins follow suit?
“For customers, we recommend seeking out providers with fixed-price promises. Many operate at a local level, so check what’s available in your area using a comparison site.”