In the days ahead, many Irish mobile phone users will see their monthly bills jump by close to 10 per cent as a result of a policy rolled out by some of the leading providers that seems to work against the best interests of consumers.
But the reality is there are too many phone users who are paying too much for their phones irrespective of what level of price hikes the companies impose.
When operators, including Vodafone, eir and Three announced a couple of years ago that they were going to 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, we were still living in the good old days.
Inflation had been largely stagnant for donkey’s years - in July 2021 when Vodafone announced details of the changing in its pricing policy, inflation was running at 0.4 per cent - so the price move was not exactly front page news.
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But then almost overnight things changed dramatically and not for the better.
Inflation went through the roof which saw the somewhat inconsequential policy shift suddenly have significant consequences.
Many users faced double-digit price increases in 2023 and they wouldn’t be far below that in 2024. And what has made the pricing pill even more bitter is that, in the past, customers could change service providers without penalty in the immediate aftermath of any price increase on the basis that the hike was a significant change to the terms and conditions, but people are now locked into contracts irrespective of such price moves as they have been pre-warned they are coming.
Many people who sign up for standard 24-month deals may be hit with at least two hikes over the contract duration.
ComReg, the communications watchdog, has no role in pricing but it has publicly expressed concern about the practice of linking charges to inflation.
“In some cases, the price increase could happen immediately after consumers have entered into a contract,” the watchdog has said. “While ComReg has no retail price regulation role [it] has been concerned from a consumer protection perspective about this practice since its introduction.”
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.
However, in response, the Minister for Communications Eamon Ryan has said no action will be taken – at least in the short term.
He told the Dáil last month that 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”.
And he added that “any proposal to legislate to prevent retail telecoms and broadband providers from offering variable priced contracts based on the CPI would require careful consideration”.
But inflation linked price hikes that are impossible to avoid are not the only way Irish consumers might be paying over the odds for their phones. There is a very good chance that every person reading this on a phone that is over two years old and on a bill-pay contract is paying more than necessary because they are still being charged for a handset that they have already paid for.
Under long-established rules, once you come to the end of a two-year contract with a mobile phone provider, you own your handset and you are entitled to have it unlocked.
Once it is unlocked you can switch to any operator on a sim-only plan or you can stay with your existing provider but switch to a different tariff which means you will pay a lot less each month.
Often people coming to the end of a contract are offered an upgrade and the promise of a free phone. The deal might sound attractive, but it can frequently work against you.
For starters, the upgrade is not a reward, it’s just a way to lock you into a new contract and the handset is never “free”. It is something you will have to pay for over the course of your new contract and it won’t even be slightly subsidised if you have to pay something towards it up front.
While companies – and phone makers – try to lure people into an endless cycle of upgrades, the reality is your phone is now so smart that it really does not have to be updated every couple of years.
But at least a new phone is something. If you have an older phone and you haven’t been offered a new deal you are almost certainly continuing to pay for a handset you already own and are paying a premium for absolutely no reason.
A person with a phone they own outright could hang on to it and switch to a sim-only plan even with their existing provider for as little as €15 a month with the switching process not unduly complicated - although we have heard horror stories - and you obviously get to hang on to your existing number.
And it is worth remembering that Clear Mobile, GoMo and Tesco Mobile all piggyback on the main providers’ networks so the level of coverage should be comparable.
If you are out of contract and shopping around it is also worth doing some sums - it might save you money to buy a handset outright rather than locking yourself into a 24-month contract, for instance - and don’t let yourself be bamboozled by the promise of vast amounts of data.
A package with a significant amount of data might make financial sense but if you are not a heavy data user or spend most of your time in areas covered by wifi you might end up paying for data you never use.
It is also worth haggling with your current provider several weeks before your contract is due to end. Do your research and work out what the alternatives are and then start the process. If you are getting nowhere with the person you are speaking to, ask to talk to someone in their retention unit - they might be more receptive to your threats to leave.
And no matter who you are with or how much you are paying, do pay attention to roaming charges. Thankfully - because of our friends in Brussels - roaming charges are not the same money-grabbing gouging curse they once were (at least when you are using your phone across the EU) but if you are outside of the EU - or taking a ferry from Ireland to France - you could still be hit with a savagely high bill if you roam like you’re at home.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
