Imran Rahman-JonesTechnology reporter
The UK’s media regulator has criticised O2 for raising its prices by more than it promised customers when they took out their phone contracts.
Ofcom said it was “disappointed” with the firm, and said it was going against “the spirit of our rules” around being transparent to customers about price rises.
In January, new rules were brought in to stop phone and broadband companies raising prices in the middle of a contract without warning.
O2 said it has not gone against the regulation and that Ofcom’s rules “do not prevent companies from increasing annual price changes – for example, to invest in improving networks”.
The company said it spends £700m a year on improving infrastructure and customers can leave their contracts without a penalty.
But consumer expert Martin Lewis said he was “up in arms” over the move, which was “making a mockery of Ofcom”.
He said on The Martin Lewis Podcast he believed this would lead to other companies following suit.
“O2 customers’ prices are going up – but likely it means the door is open for all of us to now see prices by more than we were told when we signed up,” he said.
O2 told its customers they had 30 days to leave their contracts without any termination charges – though if their plan included a handset, they would still have to pay that off in full.
But Mr Lewis said older and vulnerable customers tend not to switch and may miss the 30-day window, as the price rises do not come in until April 2026.
On Wednesday, O2 emailed its customers to say it would be increasing the price of their contracts by £2.50 a month from April.
It had previously advertised that monthly prices would only go up by £1.80.
“Today, we’ve written to the major mobile companies reminding them of their obligations to treat customers fairly,” Ofcom said.
“We encourage any customer who wants to avoid these price rises to exercise their right to exit without penalty and sign up to a new deal.”
Ofcom’s rules were brought in to protect consumers and stop unexpected price rises occurring in the middle of a contract.
They stated companies had to tell customers how much their bill would rise by “in pounds and pence” before they signed up.
At the time, Ofcom’s director for networks and communication, Natalie Black CBE, said: “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.”
But the rules only banned price hikes linked to inflation.
O2’s price increase is a flat fee rather than a percentage of the monthly bill.
Telecoms analyst Paolo Pescatore of PP Foresight said “O2 is pushing the boundaries” of the regulation.
“This is extremely unfortunate, given that the mobile operator should be focused on retaining customers in a cut-throat market,” he’d told BBC News.
Meanwhile Tom MacInnes, director of policy at Citizens Advice, said it showed Ofcom’s actions “haven’t gone far enough”.
“The regulator needs to wake up and make these essential markets work for everyone,” he said.
“Ofcom needs to go back to the drawing board and bring forward plans to stamp out mid-contract price rises once and for all.”
Mr Lewis also said he had written a letter about this addressed to the chancellor, the technology secretary and the head of Ofcom.
BBC News has contacted them for comment.
Ofcom did not comment on Mr Lewis’ letter.
Ernest Doku, telecoms expert at Uswitch, said while the regulator’s latest telecoms complaints figures were “at some of the lowest levels ever”, service issues were still the main driver of complaints about mobile and broadband providers.
“Against the backdrop of increasing annual price rises, providers need to recognise their responsibility to deliver corresponding improvements in service and value,” he said.
“For consumers, this data is a timely reminder to compare deals regularly and switch if their provider isn’t sufficiently meeting their needs.”
