Broadband customers who stick with their supplier beyond initial deal periods have seen prices rise by up to 37 per cent in the past five years, new research shows.
The rises mean that households that are not on a fixed contract pay as much as £105 a year more than those who are tied into a deal, the research from uSwitch found. In many cases, these will be households who were once on a deal, but did not shop around for a new one when theirs expired. Broadband providers then often increase prices over time, leaving customers with higher bills until they next shop around.
The biggest increase was seen for those using slower copper wire broadband, while those on faster fibre broadband saw prices rise by 19 per cent. Line rental, which is paid for by nearly all customers, has risen by an average of 37 per cent over the five-year period and is now an average of £216 per year, £58 more than it was in 2011. The price rises come despite evidence from the regulator Ofcom showing that wholesale prices have fallen over the same period.
Including line rental prices, the average cost for copper broadband for those with a fixed contract rose by £1.12 to £20.62 between 2011 and 2016 while for fibre the cost rose 54p to £28.61, according to the site. But for those not in a contract, prices rose by £8.07 to £29.41 for copper and by £5.51 to £35.16 for fibre - the equivalent of 38 and 19 per cent respectively. BT currently has the most expensive line rental at £18.99 per month but from 1 March Sky will charge the same. During the past five years, Plusnet has doubled the price of its monthly line rental while Sky has increased prices by 42 per cent - although after the March increase this will rise to 55 per cent.
Figures from Ofcom show that in the past six years wholesale line rental prices have fallen by 25.37 per cent to November 2016. The data shows the percentage each provider has put up their prices by between 2010 and 2016. These figures are slightly different to the uSwitch prices and showed that Sky had put up prices up 41.14 per cent, TalkTalk by 31.18 per cent, Virgin by 38.51 per cent, BT by 27.50 per cent and the Post Office by 29.02 per cent.
A spokesperson for Ofcom said: 'We're concerned that landline providers have been raising the price of line rental, even as their costs have been coming down. We have examined whether protection is needed for customers who rely on their landline and are less likely to change provider, and we'll announce our findings soon.' Some of the major providers were asked why prices had risen so much.
Plusnet said as it doesn't sell line rental on its own and that the figures don't account for the fall in prices of its broadband packages.
A spokesperson from Plusnet said: 'We don’t sell line rental on its own, it must be bought with broadband, which allows customers to benefit from much cheaper broadband. They have tried to separate the two out and disregarded the advantage of the decreasing price of broadband in the process.'
A spokesperson for Sky said: 'The cost of line rental not only covers the cost of the physical line to a customer’s door, it also contributes towards continued investment in our network, as well as delivering the very best service to our customers.'
While BT said: 'The first point to make is that Ofcom's figures show that BT's line rental percentage increases are actually less than rivals including Sky and TalkTalk, so it's certainly not a point that you should only be putting to BT, in fairness.
The next point is that we recently announced price rises that will take place on 2 April this year, but we have frozen the price of line rental this time.Line rental is charged by all communications companies and this charge enables phone calls but also broadband.
Millions of BT customers enjoy free weekend calls with their line rental and can make free calls to 0845 and 0870 numbers within their inclusive period.Line rental takes account of costs including customer support at contact centres (and 90 per cent of our customers' calls will be answered in the UK and Ireland in spring 2017).'
While a Virgin spokesperson said: 'We understand that price rises are never welcome. We work hard to meet customers' rising expectations and sometimes this means that our prices change. We also aim to offer customers choice, and are pleased to be the only major provider with broadband packages that don't include a line rental charge.'
HOW TO BEAT THE BROADBAND PRICE HIKES
Broadband and phone providers are not scared of putting up prices and during the past few years there have been several inflation-busting increases.
But if you're in the middle of a fixed contract and prices are hiked there is a way out.
Ofcom rules state that if a provider increases the price mid-way through your contract you are allowed to leave.
You should be given 30 days in which to contact your provider to tell it you want to leave, and there should be no penalty for doing so.
There is one loophole to this, if you already knew about the rise before you signed up your provider may not let you leave without penalty.
If this is the case, it's still worth asking to leave, and for it to waive the penalty. If it won't, take your complaint to the Ombudsman. However do not cancel your direct debit until it agrees, as it may damage your credit score.