UK Mobile Customers Brand Upcoming Price Hikes “Unfair”

Annual price rises for telecom customers is a divisive subject that has drawn much media attention since O2 announced a controversial change in policy last October. The announcement followed Ofcom’s decision to mandate the move to a “pounds and pence” model, aiming to make it easier for people to understand their bills.

To find out what consumers think, we broached the topic of price rises as part of CCS Insight’s wide-reaching annual survey into UK customers’ buying behaviours for mobile phones and connectivity, which was published this week.

The research showed that among people who expect their bill to go up in April 2026, almost half (47%) said they know the amount it’ll increase by. This news should be welcomed by Ofcom, which banned the previous, inflation-linked model in a bid for greater transparency.

But one of the challenges with a flat-rate approach is that price hikes can outstrip inflation. Since Ofcom changed the rules, UK inflation has fallen sharply, meaning that many customers face a higher increase than they might have under the old mechanism.

Additionally, when rises were aligned with inflation, everyone’s plans went up by the same proportional amount. Now, the percentage increase on entry-level tariffs is greater than for more premium offers. This is likely to prove toughest for people struggling to pay their bills.

Among people in our survey who knew the amount by which their bill would rise in April, approximately half said they thought the increase was unfair. This proportion rises to nearly two-thirds for O2 customers, an indicator that the policy hasn’t landed well.

To recap, O2 will increase prices for all contract customers by £2.50 per month this April, up from the previously announced £1.80 per month. It announced a similar change for broadband customers a few weeks earlier.

The decision provoked a major backlash, driven by consumer rights campaigner Martin Lewis, who raised the matter with government and slammed Ofcom’s policy on mid-contract price rises. His protests led to the UK technology secretary, Liz Kendall, writing an open letter to Ofcom requesting that the regulator reviews current guidelines. Chancellor Rachel Reeves summoned telecom bosses to a meeting to discuss customer fairness.

The wrath was largely caused by O2’s decision to apply the change to people already under contract. It meant that O2 customers who had signed up on the understanding that bills would increase by £1.80 each month were now being expected to pay another £0.70 per month.

Although I was surprised that the market response went all the way to the top, I did feel that O2 was taking a big risk. A negative media reaction was inevitable but, more importantly, this move threatens hard-won customer trust and loyalty. In a competitive market like the UK, loyalty is worth its weight in gold to a provider.

Surely, a better approach would’ve been to raise the annual increase solely for new or out-of-contract customers. This is what O2’s rivals have done: Vodafone and EE are also putting prices up by £2.50 in April, and Three’s prices will increase by between £1.80 per month and £2.30 per month, depending on the amount of data in a customer’s plan. O2’s blanket approach for all customers may have shielded its competitors from criticism of their price hikes.

O2’s move also drew criticism from Ofcom. The regulator said it was “disappointed” by the decision, arguing that it goes against the spirit of the new rules to ensure greater transparency. That’s a valid point, but I also wonder whether Ofcom could’ve foreseen this scenario and pushed for more stringent rules in the first place.

O2 points out that the extra amount equates to only a few more pence each day, which is unlikely to put too much extra strain on household budgets. It also clarified that customers could exit penalty-free if they wish. However, I wonder how many would really go to that trouble. Older customers may not feel confident about changing provider.

I have sympathy for operators wanting to raise prices. O2 set aside £700 million for its mobile network in 2025 — equivalent to about £2 million every day — in a bid to expand coverage and improve service levels. It also reported an 18% surge in data volumes among customers, which is a justifiable argument to charge more to support increased demand.

The big question for O2 is whether the move will prompt its customers to consider leaving. It had been losing customers even before the announcement, including close to 100,000 on the lucrative contract side of its business in the year to September 2025.

With new players such as Revolut and Lendable joining the fray and promising attractive tariffs, there’s no shortage of choice if customers become disillusioned and consider switching.

Lebara — one of many virtual providers that don’t implement annual price rises — has sought to turn the media storm to its advantage with some canny PR. It announced on social media that tens of thousands of customers have joined it since O2’s decision.

On the other hand, I’m sceptical of some predictions I’ve seen that suggest customers will leave O2 in their droves. In our previous surveys, such as those fielded in 2023 and 2024, buyers indicated that price rises would prompt them to act. But the market’s consistently low churn suggests most haven’t followed through.

I’m sure O2 will have a robust retention strategy in place. I noted its move in December to offer a 10 GB data gift to millions of customers, which seemed a good way to soften the price rise blow and gain some much-needed goodwill among its customers.

Notably, the wider Virgin Media O2 organization has also been under pressure and has been working hard to turn around its poor reputation for customer service. It’ll be interesting to see if that area takes a knock in Ofcom’s next quarterly announcement about market complaints.

In a highly competitive market, in which the growth of virtual providers is far outpacing their mobile network operator partners, every customer is hard won. I’ll be keeping a close watch on operators’ pricing strategies throughout the year, so stay tuned for further updates.