Irish mobile phone and broadband customers face an ongoing risk of significant price hikes every year without being given a chance to shop around for better value, it has been warned.
Many of the State’s leading telecom operators, including Vodafone, Eir and Three Mobile, link the price of their mobile and broadband packages to inflation, with increases of 3 per cent plus the Consumer Price Index (CPI) rate of inflation rolled out each year.
With inflation skyrocketing in recent years, the policy shift has seen many users facing double-digit price increases. While inflationary pressures have eased, users still have to contend with hikes of close to 10 per cent in the weeks ahead.
In the past customers could change service providers without penalty in the immediate aftermath of any price increase, but they are now locked into contracts irrespective of such price moves. Many of those who sign up for standard 24-month deals may be hit with at least two hikes over the contract duration.
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The companies have also indicated that, in the event of inflationary pressures being reversed and the CPI entering negative territory, they will not be lowering their prices to reflect that fact.
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In response to queries from Green Party TD Neasa Hourigan, the communications watchdog Commission for Communication Regulation (CCR ComReg) said it was concerned about the practice of linking charges to inflation and said it had raised the issue with the Department of Communication.
However, the Minister for Communications Eamon Ryan said that no action would be taken – at least in the short term.
ComReg told Ms Hourigan that price increases linked to inflation meant consumers would be subject to at least one price increase during their minimum term without being able to exit their contracts without penalty.
“In some cases, the price increase could happen immediately after consumers have entered into a contract,” the watchdog said.
“While ComReg has no retail price regulation role [it] has been concerned from a consumer protection perspective about this practice since its introduction,” it said.
ComReg also pointed out that Ofcom, the UK telecoms regulator outlined proposals to ban the practice of linking contracts to inflation late last year and said it had advised the Department of Communications of its concerns and Ofcom’s proposals.
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In response to a parliamentary question asking if he had plans to legislate to prevent retail telecoms and broadband providers from offering variable priced contracts based on the CPI, Mr Ryan said the “pricing levels set by telecommunication services providers, including for mobile phone and broadband services, is a matter for those relevant service providers operating in a fully liberalised market.”
He said “any proposal to legislate to prevent retail telecoms and broadband providers from offering variable priced contracts based on the CPI would require careful consideration”.
Ms Hourigan said that while ComReg “has concerns about this practice [it] is limited in what it can do. The ball is very much in Department of Communications’ court in terms of legislating for stronger consumer protection. I’ll continue to push for this.”
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