The policy adopted by a growing number of Irish telecoms providers including Vodafone, eir and Three which sees them linking the price of their mobile and broadband packages to inflation has attracted the attention and the ire of a reader called Neil.
The story is actually three years old although its tremors are still being felt by most of us.
When Vodafone announced that it was changing its pricing policy just over three years ago, inflation was running at 0.4 per cent.
That meant that the price move was not exactly front page news but within a year everything had changed. Following the end of the pandemic and Russia’s invasion of Ukraine, inflation started to spiral for the first time in more than a decade and what seemed like an inconsequential policy shift suddenly had significant consequences.
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Many users faced double-digit price increases in 2023 and they were not far below that in 2024. While Inflation has eased back in recent months, price hikes of more than 5 per cent are likely next year too.
“The situation seems to raise serious concerns about consumer protection, especially with consumers locked into contracts that allow for annual price increases without a clear path to exit,” Neil writes.
“I found this out to my detriment when I looked into my Vodafone and Virgin TV bills to discover that between 2023 and 2024 we paid hundreds of euro more than we had contracted to.”
He contacted ComReg who told him that while they share some of his concerns, “their hands are tied without legislative change. Despite the market being labelled as `liberalised’, these price hikes are uniform across providers, leaving consumers with little choice and minimal protection,” Neil says.
He says that “in the telecom sector, no one seems sure who is responsible for protecting consumers. The whole thing feels like the Leinster House bike shed debacle – plenty of finger-pointing, but no one stepping up to solve the issue and we, the consumers, continue to pay the bill.”
He is not wrong and one other element that has made the new pricing model harder to take 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 their terms and conditions.
Now, people are locked into contracts irrespective of such price moves as they have been pre-warned they are coming and many people who sign up for standard 24-month deals are hit with at least two hikes over the contract duration and have little by way of comeback.
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,” it said earlier this year.
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 no plans for legislative change are on the horizon and with the current Dáil preparing to pack up and go it seems like the providers will continue to be free to do as they please irrespective of the impact their pricing models have on consumers.
