NEW STUDY WARNS DIGITAL DIVIDE COULD INCREASE AFTER LATEST WAVE OF MOBILE CONTRACT PRICE RISES

YouGov research released today highlights the potentially catastrophic impact of recent mid-contract price rises in the Telecoms industry, with over five million Brits (9%) having been unable to pay essential bills since the pandemic began.

The figures, commissioned by Tesco Mobile, reveal unexpectedly high mid-contract price rises this year (as high as 4.5% for Three, Vodafone, BT and EE customers), could lead to a further increase in the digital divide.

More than one in three Brits (38%) admit even a small increase to household or utility bills would cause them to worry financially – with one in eight (14%) revealing it could cause them to face potential disconnection because of arrears.

Over 40 million Brits1 are set to be impacted by mid-contract price rises across major networks this year. They come at a time when staying in touch has never been more important; Two in five (42%) believe their phone has become more essential to them during the pandemic.

Half of those with a mobile phone contract (50%) weren’t even aware a network provider could put up their prices mid-contract – despite the industry making more than £1bn of revenue from the practice since 20132.

This can be partly explained by the lack of understanding around industry jargon. Half (48%) don’t understand the term RPI (Retail Price Index), while just over two-thirds (69%) are unaware of what CPI (Consumer Price Index) means – both are often used in small print and force customers to accept price rises whatever their situation.

Tesco Mobile is calling on other networks to reverse prices hikes this year and join them in promising to keep prices frozen throughout the duration of their customers’ contracts – a promise the business has made to its customers for the last eight years.

“Beyond being misleading, our research has shown that mid-contract price rises in our industry will have a financial impact on those who have already been hit hard,” Tom Denyard, Tesco Mobile CEO, said.

“There could not be a worse time for networks to implement their biggest price rises. For a family of mobile users, the increased costs mean less items in the weekly shopping basket or additional pressure to pay a bill that was higher than expected.

“Telecoms companies have never played a more important role in people’s lives. During one of the most uncertain financial times on record, and at a time of physical isolation, this is not a time to be making a phone harder for someone to afford. That’s why we are calling on other networks to reverse price rises this year.”

Karen Perrier, CEO of national debt charity and helpline, Money Advice Plus agrees that unexpected increases in bills will worsen an already bleak picture of financial health for many people:

“Household debt is increasing daily – calls into our national services have increased by 20% over the past few months, with an alarming amount of people struggling to afford essentials like food, heating, or even their phone bills. That’s why it feels especially wrong to profit from price hikes this year. A few pounds out of a household budget can have a devastating effect.

“We’ve seen how essential phones and broadband have been for people during the pandemic – they’ve kept people connected during lockdown but have also been integral to the likes of home-schooling, collecting benefits and accessing support.

“It’s vital that we ensure that people can afford to stay connected and we would really encourage the networks to think again about the impact of their actions and the transparency of their contracts. Most people are unaware that their costs can go up and that there is absolutely nothing they can do about it.

“As an organisation, we’ve existed for 150 years and we’ve never known a worse situation – with the potential of more hardship to come. That means everyone needs to play their part to take the pressure off the most vulnerable.”