(Alliance News) - The UK telecommunications industry regulator on Tuesday said it wants to ban price hikes linked to inflation from customer contracts.
The Office of Communications said most major phone, broadband and pay TV companies in the UK currently include mid-contract price rises linked to future inflation rates. These and other percentage-based increases create uncertainty for customers, and it wants to ban the practice.
Instead, Ofcom wants the telecom firms to tell customers upfront in "pounds and pence" about any price rises included in their contract.
"We have provisionally concluded that inflation-linked mid-contract price rise terms can cause substantial amounts of consumer harm by complicating the process of shopping for a deal, limiting consumer engagement, and making competition less effective as a result," Ofcom said.
"These terms also require customers to unfairly assume the risk and burden of financial uncertainty from inflation, with tangible impacts on their ability to manage costs at a time when household budgets are already stretched to the limit."
The regulator said it will consult on the changes until February 13 next year and then will publish a final decision in the spring.
London-listed broadband providers include BT Group PLC and Vodafone Group PLC. BT was down 2.9% at 127.55 pence early Tuesday, while Vodafone was down 1.2% at 67.73p.
By Tom Waite, Alliance News editor
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