Tesco raises mobile prices following controversial Ofcom rule

In the United Kingdom, Tesco Mobile has announced significant changes to how it will handle mid-contract price increases for its mobile phone customers. The new rules will take effect from December 17, 2024, and will apply specifically to contracts not associated with the 'Clubcard Price' deals. These adjustments come amid a broader adoption of Ofcom's new guidelines concerning inflation-linked price increases across the telecommunications industry. Previously, companies were allowed to increase prices mid-contract in line with inflation, plus an additional 3.9%. However, the new rules also require operators to specify these increases in 'pounds and pence', aiming to provide clearer information to consumers. Tesco Mobile's approach is distinct as it will utilize a proportional model, meaning that price rises will be calculated relative to each customer's basic monthly price. This is designed to ensure that customers on lower tariffs do not face disproportionately high increases compared to those on higher tariff plans. For instance, a customer on a £14.99 a month plan could expect an annual increase of about 90p each month, while someone on a £30 plan might see a £1.80 increase monthly, accounting for a 6% annual rise across the board. This strategy highlights Tesco Mobile's intention of creating a fairer pricing structure for its customers, especially during a time when many are concerned about rising costs. Furthermore, customers can expect their basic monthly usage price to remain stable throughout the duration of their minimum contract period. They also have the added benefit of being able to utilize their domestic allowances at no extra cost in 48 countries across the EU and beyond for the same duration, which could enhance the value of their mobile contracts. Jonathan Taylor, the CEO of Tesco Mobile, emphasized the importance of certainty in contract pricing amid the ongoing economic fluctuations, underlining that this new structure offers transparency and fairness for all customers. Experts have noted that this new proportional pricing model juxtaposes sharply with the flat-rate price increases implemented by other mobile network providers, making Tesco Mobile a potentially more attractive option for budget-conscious consumers. However, it has been observed that a 6% increase is still a significant burden during challenging economic times. Moreover, customers should remain vigilant regarding any percentage changes that may arise once their contract terms conclude, suggesting the prudence of comparing different providers to secure the best deal.