Ofcom’s new rules for mid-contract price rises have backfired on a number of fronts according to research from UK broadband comparison site, Broadband Genie.

2026 is the first year many broadband customers will see their bills increase under the new ‘pounds and pence’ rules. But the new rules will fail millions of bill payers. Many broadband customers will see their bill raise by £4 (€4.60) a month. Almost double versus what they would have seen under the old, inflation-linked system.

For example, under the old regulations, Virgin Media customers would have seen a 7.6 per cent increase to their contract (3.6 per cent RPI plus a 3.9 per cent fixed margin). However, the new fixed amount of £4 added to their average broadband package of £22.86 per month represents a price rise of 18 per cent.

Across all contracts, this on average, this costs each customer an extra £2.11 more per month.

Over the next 12 months, some of the largest internet service providers (ISPs) are set to profit an additional £186 million compared to the previous inflation-linked system. This figure represents just over a third (37 per cent) of the market. This is because these customers switched or renewed their deals after the ‘pounds and pence’ regulations took effect on January 17th.

Alex Tofts, broadband expert at Broadband Genie, commented: “The ill thought out regulations from Ofcom have totally backfired. By changing the inflation-linked system, it removed a natural benchmark for what providers could do, leaving the door open for them to further exploit loyal customers. Providers have not hesitated to raise customers’ prices far beyond the rate of inflation, costing bill payers millions. The only way we can protect customers is to outright ban these absurd mid-contract price rises.”

Disproportionate effect on customers

When providers apply a blanket increase across all tariffs, the effect is much larger on cheaper deals. For example, a £4 monthly price rise represents an 8 per cent increase on a £50 deal, compared to a 20 per cent increase on a £20 deal.

Vulnerable customers and those with less disposable income are likely to be on cheaper tariffs. These vulnerable customers will be hit the hardest under the new regulations.

Consumers left in the dark

Ofcom introduced these rules to make it clear what customers were signing up for at the start of their deal. However, 45 per cent of customers who took out a broadband contract after the introduction of fixed price rises were unaware that their deal included annual increases. 58 per cent do not know how much their deal will go up in April.

Tofts added: “The rules have clearly not had the intention of making broadband deals more transparent. Not only are customers still not sure what will happen to their bill, but some of the most vulnerable customers will be the hardest hit. It was always clear, the only way to make things transparent for customers was to ban mid-contract price rises. We believe the price customers see is the price they should pay.”

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Tags: broadband, broadband genie, ISP, Ofcom