Millions of families now face punishing broadband and phone bill hikes as telecoms giants cash in on price rises.

Firms are inflicting increases of around 10 per cent in the spring, despite inflation hitting a 30-year high of 5.4 per cent.

Mobile phone companies are ramping up bills even higher — by using an outdated inflation measure that could push up prices by more than 11 per cent.

Hikes: Telecoms firms are inflicting increases of around 10 per cent in the spring, despite inflation hitting a 30-year high of 5.4%

Critics say the demands are unacceptable as families face a soaring cost of living crisis while telecoms firms rake in huge profits.

It is estimated the move will cost households an extra £104.5 million a month — or almost £1.3 billion a year.

Pressure is now mounting on watchdog Ofcom to intervene, with campaigners accusing firms of exploiting the small print to allow them to raise prices mid-contract, which customers cannot escape without paying hefty penalties.

And today they back Money Mail’s call for firms to scrap these punitive price hikes. Here, we explain what the increases mean for you — and how you can still slash your bills.

Sneaky contracts

Major providers began sneaking annual price hikes into customer contracts in 2020. The clauses give them the right to raise bills once a year, usually in March or April.

Most increase bills in line with inflation as measured in December by the consumer price index (CPI) — plus an extra 3.7-3.9 per cent. 

Telecoms firms say the additional percentage increase is needed to ensure investment in their networks.

Martyn James, from complaints service Resolver, says: ‘It’s already appalling that telecoms providers are allowed to increase prices mid-contract without giving customers the option of walking away without penalty. 

Small print: Major providers began sneaking annual price hikes into customer contracts in 2020. The clauses give them the right to raise bills once a year, usually in March or April 

‘But to push up prices above and beyond inflation is deeply unfair, especially now given their profits and when many people are struggling.’

With most contracts typically 24 months long, many households will have little choice but to pay the increase because those who try to leave before their deal ends face hefty early exit fees. 

If you switch away mid-contract, you often have to pay for the remainder of the deal — which could be hundreds of pounds plus VAT.

Ofcom says firms must set out price increases clearly when customers sign up and cannot bury them in the small print.

Money Mail found that TalkTalk did not mention the annual price rise option until the fifth page of its terms and conditions, while Sky customers must read right to the bottom of ‘the legal bit’ on its website where it says ‘prices may go up during your subscription’.

Sarah Coles, from investment platform Hargreaves Lansdown, says: ‘When you sign up to a contract, it’s perfectly reasonable to expect that the price will stay fixed while you’re locked into it. 

But that’s not how an awful lot of telecoms companies work. They argue it’s in the small print and that increasing prices with inflation is fair, but that’s not how it feels.’

Virgin Media is the only big provider not to include annual price hikes in its terms and conditions. Under Ofcom rules, it can still raise prices midway through a deal, but customers are allowed to cancel without penalty within 30 days of the announcement.

Last week Dan Sellick, from Earlsfield in South-West London, received a letter from Virgin Media to say his broadband bill would go up 12 per cent from March.

The 29-year-old, who works in theatre production, says: ‘Telecoms firms should be committing to the price customers signed up for rather than increasing prices months in. 

‘There is already a huge amount of pressure on families, given the rising cost of living, and it would be an easy win for providers to cancel this year’s increase.’

Bumper profits

BT’s latest results revealed pre-tax profits of £1.8 billion, while Vodafone reported gains of €4.4 billion (£3.6 billion). Sky made a £206 million profit before tax according to accounts up to December 2020.

Critics also say telecoms giants are being shown up by smaller suppliers. KCOM, which is based in East Yorkshire and has 250,000 customers, has cancelled its 9.3 per cent price hike this year to help customers it says are burdened by rising household costs.

And Zen Internet, which has 85,000 residential customers, offers a lifetime price guarantee that means the cost of its 12-, 18- and 24-month contracts remain the same for the length of the deal.

SSE also pledges not to hike prices during its 18-month deals. And Cuckoo, which has fewer than 100,000 customers, offers fixed prices for 12 months.

Ernest Doku, telecoms expert at Uswitch.com, says: ‘Most households will be bearing the brunt of unprecedented mid-contract rises to their broadband bills this spring.

‘While consumer gas and electricity rates have risen across the board owing to the surge in wholesale energy prices, telecom providers will struggle to justify the hikes.’

Penalties: If you switch away mid-contract, you often have to pay for the remainder of the deal – which could be hundreds of pounds plus VAT

Watchdog call

Lyndsey Burton, managing director of comparison site Choose, is calling on regulator Ofcom to block or cap the increases.

She says: ‘The pandemic has demonstrated how reliant we are on broadband and mobile services to keep us connected to each other. 

‘Ofcom concede these are ‘essential’ services. Yet they are failing in their duty to support customers’ ability to budget for them.’

Campaigners are also calling for more to be done to help the most vulnerable customers, such as those who rely on a landline and do not use the internet.

Mr James adds: ‘Providers could cancel these annual rises to help struggling customers. They have clearly done well over the past few years with more people dependent on their broadband connection.’

BT says prices for its most financially vulnerable customers will stay as they are. This includes those with its BT Home Essentials, for people on certain benefits, BT Basic or Home Phone Saver deals.

Virgin is also committed to protecting vulnerable customers and has frozen the price of its Essential broadband package for those who claim Universal Credit.

TalkTalk says it is still working through details but is taking into consideration customers’ vulnerability. Vodafone says those who need extra payment support can speak to its specialist team.

Mobile madness

Mobile phone providers are hitting customers with even harsher price hikes. This is because many raise costs in line with the retail price index (RPI) measure of inflation, which is typically higher than CPI. In December, RPI was running at 7.5 per cent.

Virgin says it is raising mobile phone bills on April 1 by RPI inflation plus 3.9 per cent. It will use the January inflation figure, which is yet to be published.

O2 customers who signed up after March 25 will be hit by the same rise. Those who joined before will see prices increase by RPI inflation alone.

Tesco Mobile says it does not hike prices mid-contract. But customers will be charged more than double for calls made outside their allowance from February 9.

It currently costs 25p per minute plus a 10p minimum charge to make phone calls above your usage limit. This will increase to 55p per minute plus a 27p minimum fee.

Ms Coles says: ‘It’s especially cruel to hit people with hikes linked to RPI: an out-of-date measure of inflation that isn’t used for any of their income.’

An Ofcom spokesman says: ‘Companies do need to invest in their networks, but this is a difficult time for many people to deal with price rises. So we expect firms to promote cheaper social tariffs for eligible customers and make it swift and simple to sign up.’

A BT spokesman says: ‘As usage across our networks continues to increase and with our customers relying on us for connectivity more than ever, it’s crucial we continue to invest in our networks, services and the latest technology. 

‘As such, and in line with our terms, our prices for existing customers will be increasing from March 31.’

Virgin says with rising costs and customers using their services more than ever, it reviews its pricing to fuel further investment in its network and services.

A Vodafone UK spokesman says: ‘The prices reflect the rising costs we continue to face in running our network.’

TalkTalk says it is still working through the details of the increases and will update customers in March. Sky declined to comment.