Irish mobile phone and broadband customers could once more be allowed to shop around for better value mobile and broadband packages when price hikes are announced if proposed legislative changes get the green light.
In the past consumers had the right to exit a telecoms contract without penalty when price increases were announced, as such revisions amounted to a material change of the terms and conditions.
However, in recent years, many of the State’s leading telecom operators, including Vodafone, Eir and Three Mobile, started linking their prices to inflation, with increases of 3 per cent plus the Consumer Price Index (CPI) rate of inflation rolled-out annually.
Because they baked the price increases into their contracts, they did not amount to a material change which meant that consumers found themselves locked into contracts for up to two years at a time.
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Many people who signed up to standard 24-month deals found themselves being hit with at least two hikes over the contract duration.
The Minister for Communications Patrick O’Donovan will bring a memo to Cabinet this week that will allow people to side step the so-called “in-contract consumer price index” (ICPI) hikes.
Under the proposed changes, any price increases will be considered a change to the terms and conditions that will allow a consumer to exit the contract without any financial penalty.
Providers will also have to notify customers of price changes at least 30 days before they take effect to give consumers the opportunity to shop around for better value.
The Commission for Communications Regulation (ComReg) had previously expressed concerned about the practice of linking charges to inflation and raised the issue with the Department of Communication last year, although the then minister Eamon Ryan said no changes were imminent.
In a parliamentary question he said 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”.
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”.
The proposed changes are likely to be met with resistance from the providers. However, Government sources expressed confidence that the measures would be quickly implemented and could be in place before the next round of price increases next spring.
