Millions of Three customers to be hit with 2.6% price hikes
Millions of customers with Three mobile contracts will be hit with price rises of 2.6% from next month.
The move affects pay monthly handset and pay monthly mobile broadband customers who are within their minimum contract term and who joined or renewed with Three after 29 May 2015.
As an example, the telecoms provider says that for customers who are paying £25, their new cost will be £25.65.
Three wouldn’t say how many customers would be hit with the price hikes, but it says the move will affect millions of people. It is contacting customers this month to inform them of the price rise.
Pay-as-you-go and SIM-only customers are unaffected, as are those who joined or renewed their handset or mobile broadband contracts on or before 29 May 2015.
Unfortunately, affected customers can’t cancel their contracts penalty-free as a result of the increase, as Three’s contract allows it to increase prices by the Retail Price Index (RPI) rate of inflation. This year it has used January 2017’s RPI rate of 2.6%, as published in February.
Under telecommunication regulator Ofcom’s rules, customers who take out or upgrade their contract on or after 23 January 2014 can cancel their contract penalty-free if a provider ups prices mid-contract – but only if they weren’t told about this possibility prior to agreeing their deal.
A spokesperson for Three says: “Each year we have the ability to increase prices in line with the RPI rate of inflation, which is published in February. This helps to cover the increased costs of delivering our service, which have also risen in line with inflation. We review this on a case-by-case basis every year.”
Are other mobile providers upping prices?
Replaced as the official measure of inflation by the consumer prices index (CPI) in December 2003. Both the Retail Price Index and CPI are attempts to estimate inflation in the UK, but they come up with different values because there are slight differences in what goods and services they cover, and how they are calculated. Unlike the CPI, the RPI includes a measure of housing costs, such as mortgage interest payments, council tax, house depreciation and buildings insurance, so changes in the interest rates affect the RPI. If interest rates are cut, it will reduce mortgage interest payments, so the RPI will fall but not the CPI. The RPI is sometimes referred to as the “headline” rate of inflation and the CPI as the “underlying” rate.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).