The fallout of the O2 price rise has seen DSIT ask Ofcom to look at in-contract price rises again in the UK, including a “rapid review” of how easy it is to switch providers. Our research suggests Ofcom has already gone the furthest in Europe, leaving few good options available to the regulator from doing nothing through to banning the practice entirely.
Average real-terms mobile prices in the UK have fallen by a quarter since 2019, with operators delivering increasing value for money. At just 1.5%, telecoms as a share of household weekly expenditure has never been so low and has been falling year-on-year since 2020.
Mobile prices in the UK have long compared well internationally, with some of the lowest standalone mobile prices relative to France, Germany, Italy, Spain and the US. For the price of a 5GB mobile tariff specifically, prices in the UK are now a third cheaper than they were in 2017.
By going further than any other regulator and banning inflation-linked price rises, Ofcom has inadvertently made things worse. Despite improving budgeting certainty, the move to a ‘pounds and pence’ model has had a negative impact on bills. From April 2026, on average mobile customers can expect to pay 34p/month more than under the previous approach.
Nowhere is it possible for consumers to exit a contract without penalty due to an agreed price rise, but some regulators (e.g. France and Germany) have increased the period during which consumers can exit contracts due to unexpected price rises.
The UK’s switching regime is among the simplest, especially when compared to Italy and Malta. This is reflected in the number of UK consumers switching, which is already among the highest suggesting there is limited room for improvement in the current switching regime.
The options available to Ofcom are limited, and few are good. They include reviewing the current rules but ultimately taking no action, extending or making indefinite the period consumers have to exit their contract, limiting the frequency of price increases during a contract term, or at worst, banning in-contract price rises entirely.
As average mobile prices in the UK fall, customers are using more data and experiencing better quality of service
Mobile operators continue to deploy and upgrade infrastructure across the UK, improving coverage and performance to meet the growing demands and expectations of their customers. EE’s ‘5G+’ – i.e. standalone 5G or 5GSA – network now reaches 66% of the population, while VodafoneThree has committed to achieving 99.95% 5GSA coverage by 2034. Targets such as this will only be met through significant private investment. Between 2019 and 2024, operators spent close to £10bn on mobile network capex, with a further £3.6bn invested in infrastructure supporting the delivery of both fixed and mobile services.
During that same period, Ookla reports that median download speeds more than doubled from almost 22Mbps to 55Mbps. Meanwhile, average monthly mobile data consumption (excluding M2M) trebled from 3.2GB to 9.6GB as consumers and businesses became more reliant on high-quality connectivity. However, over the past five years, and despite a marginal uplift in 2023, the average price of mobile services has declined by 5% in nominal terms and by over 23% when adjusted for inflation (see Figure 1).
The UK mobile market exhibits a positive downward trend when average prices are considered in the context of rising data usage (see Figure 2), indicating that operators are offering greater value for money over time. In each year since 2019, consumers have been paying less for 1GB of mobile data, the average monthly price of which has fallen 68% in nominal terms and by almost 75% in real terms during that period. Similarly, when those same prices are considered relative to the growth in mobile download speeds, there is again a pronounced downward trend. The average consumer is now paying 63% less per Mbps than in 2019 in nominal terms and 70% less when adjusted for inflation. Even after accounting for recent annual price rises, consumers in the UK enjoy increasing value for money in terms of both data consumption and network performance – something Ofcom has publicly acknowledged on more than one occasion.
Mobile prices in the UK continue to compare well to other leading European countries
Mobile prices in the UK have long compared well internationally. Across Europe, demand for, and adoption of, larger data allowances have increased, although prices of mobile tariffs have not tended to follow suit. Monthly prices for 5GB of mobile data have fallen in many European countries, as has often been the case for a 20GB package. Analysis of the monthly price of 5GB data in the UK showed that it had decreased by a third since 2017, making the UK the third cheapest among the group of comparator countries (France, Germany, Italy, Spain) – see Figure 3.
Ofcom also benchmarks prices in the UK against those in France, Germany, Italy, Spain and the US, comparing for high, medium and low user profiles. According to the regulator, the UK had the second lowest standalone mobile prices across the three mobile connections used in its 2024 analysis, when factoring in both weighted average and lowest available prices. In 2023, the UK was second for weighted average prices and joint first (with France) for lowest available prices.
Ofcom’s pounds and pence approach has inadvertently resulted in a rise in consumer bills
UK mobile operators have for some time raised prices for contracted customers annually (typically on 1 April) based on inflation – either measured by the Consumer Prices Index (CPI) or Retail Prices Index (RPI) – plus a fixed percentage. Ofcom has emphasised that it does not regulate retail prices and, in December 2022, stated that it did not have plans to introduce any new consumer pricing rules. However, in July 2024, Ofcom intervened to ban in-contract price rises linked to inflation (or any percentage terms). The intention was to provide greater certainty to consumers about the prices that they would pay for their telecoms services given the lack of understanding of inflation. As such, the regulator required that, from 1 January 2025, operators set out clearly in contracts any price increases in a ‘pounds and pence’ format.
Inadvertently, Ofcom’s rule change has so far appeared to have had a negative impact on consumers’ bills – see Table 1. In April 2025, customers of EE, Three, O2 and Vodafone would all have been better off each month following an inflation-linked price increase, as opposed to one under the pounds and pence regime. Based on the latest available CPI figures, customers are again expected to be worse off by an average of 34p each month come April 2026 than if Ofcom had not prohibited inflation-linked pricing. Only Three customers come out better in 2026 under the pounds and pence approach, saving 9p per month when compared to inflation-linked rises. For most customers, while they have avoided the budgeting uncertainty of price rises based on inflation, the response to Ofcom’s decision has nonetheless seen prices increase more than they would’ve otherwise.
The share of household spend on telecoms services is falling, and accounts for a smaller proportion than food, energy and insurance
As the availability and quality of mobile services continue to improve, so do the prices consumers pay. After accounting for inflation, UK household spend on mobile voice and data has fallen by £8.22 per month (or 17%) since 2019, while essentially remaining flat in nominal terms (see Figure 4). Last year, it accounted for just over £40 of average monthly outgoings, which is £6.40 (14%) less than in 2013 in nominal terms and £21.52 (35%) less, when adjusted for inflation.
The share of household expenditure on combined telecoms services continues to fall, in line with trends from previous years, representing just 1.5% in 2023/2024 (see Figure 5). Telecoms also continues to account for a smaller proportion of total spend than most other household essentials, such as food (10.3%) and energy (6.5%) – the share of the latter having risen steeply following the recent spike in wholesale prices that led to government intervention through the Energy Bill Support Scheme for winter 2022/2023. The proportion spent on telecoms services is also less than insurance (3.5%) and only marginally greater than water (1.4%), which itself increased year-on-year.
Competition in the mobile market is intense, providing not only choice for consumers but also improved connectivity across the UK. In light of market dynamics, falling spending and a declining share of total expenditure, it is clear that the sector’s role in driving inflation is limited, with consumers able to shop around, discover cheaper alternatives and switch operators with ease. As such, the implication by Liz Kendall MP (Secretary of State, Department for Science, Innovation and Technology (DSIT)) in her letter to Dame Melanie Dawes (CEO, Ofcom) that in-contract price rises represent “inflationary costs” imposed on end users appears misguided. Although 1 April price increases may have made a minor contribution to headline inflation, they should be considered in the context of more substantial contributions from other sectors and against a backdrop of consumers continuing to spend less for higher quality of service and usage.
That same letter from Kendall referenced the pricing regime in the insurance sector, where (since 1 January 2022) new and existing customers must be offered the same deal, and urged Ofcom to consider this model “as soon as possible”. However, the insurance market has been widely criticised as having loopholes that could enable providers to penalise loyalty, with research showing that individuals were often able to secure a better price when posing as a new customer. Household expenditure per week on insurance has also risen nearly 20% between 2021/2022 and 2023/2024, highlighting the risks and potentially the unintended consequences of such retail market interventions.
The comparison to water is only more relevant when taking a forward-looking perspective on prices. While mobile customers in the UK will likely continue to enjoy ‘more for more’ from operators, consumers of water services can expect to see their spending rise dramatically until the end of the decade. The industry has seen chronic underinvestment and genuine problems in terms of quality, which have resulted in financial penalties from the regulator. Suppliers have announced £96bn in planned capex out to 2030, which is set to be passed on almost entirely to consumers. Those price impacts are already starting to play out (see Figure 6), with water bills rising by an average of £123 a year – over £10 per month – in April 2025.
In this respect, the water industry stands in stark contrast to the mobile sector. While water customers are paying more each month and using less, mobile customers are experiencing the opposite – see Figure 7.
Ofcom is the only regulator to ban inflation-linked price rises, though some countries give consumers more time to exit contracts due to unexpected price rises
A number of regulators in Europe have considered the practice of in-contract price rises and related protections for consumers. We are not aware of any regulators having banned operators from raising prices in-contract, with some opting instead to extend the period during which consumers can terminate their contract after being notified of a change in price. Additionally, some NRAs have sought to provide guardrails for the use of inflation-linked price rises specifically. Italy and Malta have both passed binding decisions limiting the manner in which operators can pass through inflation-linked price rises but allow the practice within these limits – see Table 2. AGCOM in Italy introduced a cap on the total increase permissible via inflation-linked price rise (5%) above which consumers can request to change to a tariff without a CPI-linked price rise. The Malta Communications Authority (MCA) limits the maximum term for contracts including inflation-linked price rises to just six months. Though ANACOM in Portugal has not regulated in-contract price rises, it has more broadly encouraged operators to improve affordability voluntarily through promotions on standalone services and waiving early termination fees when switching to social tariffs.
While the European Electronic Communications Code (EECC) provides a consumer right to exit a contract without penalty in the event of change introduced by an operator, that right to exit specifically due to a price rise is more limited. Finding the opposite of Ofcom in terms of the transparency of inflation-linked price rises, the Court of Justice of the European Union ruled in 2015 that price rises resulting from the inclusion of a “price indexation clause” do not qualify as contract changes that could trigger a right to exit without penalty. Price changes resulting from a previously agreed and “clear, comprehensive and easily accessible method of indexation, resulting from State decisions and mechanisms” do not qualify under the decision as modifications to contract terms. Member states have largely understood that definition to mean CPI as a specific and state-measured inflation figure. In its transposition of the EECC, Belgium incorporated this decision in expressly excluding CPI-linked price rises as a cause for contract exit for consumers, so long as the clause is explained in the contract and agreed by the consumer. Similarly, HAKOM in Croatia issued an opinion that consumers that exit a contract that includes CPI-linked price rises or accounts for the possibility of these rises do not have a right to terminate their contracts without penalty. However, HAKOM also requires that operators inform consumers of a maximum threshold which CPI-linked price rises will not exceed and that operators carry out indexing annually and within 90 days of the publication of CPI data by the Central Bureau of Statistics.
For other contract changes, including price rises that were not set in contract terms and previously agreed with consumers, the EECC sets a minimum window of one month for consumers to exercise the right to exit after being notified of a change but provides flexibility for individual Member States in extending that period as desired. Though a number of Member States retained that one-month period for termination in their transposition, France, Germany, Sweden and Italy all extended the amount of time a consumer can exit their contract after an unexpected price rise (see Figure 8). Unlike other Member States, Ireland conditions its period for exit on the time at which the consumer is notified of the change, meaning consumers generally have the entire period between being notified of a change and a change being implemented to exit their contract. Operators in Ireland are required to notify changes no less than one month in advance, but in the event they alert consumers of changes earlier, consumers retain the right to exit their contract for as many as four months in advance of the change being implemented.
The UK’s mobile switching regime is among the simplest internationally and has encouraged its relatively high switching rate
Beyond regulating the conditions under which consumers can exit contracts without penalty, regulators have also specified aspects of the process by which they are able to switch operators and therefore benefit from the competition that exists in the market. Typically regulators have focused on the mechanism for customers to initiate a switch and the time this process should take (see Table 3). The interaction between the operators involved in a switch has also been regulated, including in relation to wholesale costs for switching. Many jurisdictions have gradually shortened the maximum time an operator can take to execute a switching request – in the US, an order from the Federal Communications Commission (FCC) reduced the time to be within one working day in 2009. The same requirement was enacted in the EU through the European Electronic Communications Code (EECC) in 2018, although Italian regulator, AGCOM, had already proposed such a change in 2011, but only implemented it in 2021.
Despite relatively similar regimes being imposed by regulators, switching rates vary significantly, ranging from 4.4% (US) to 17% (Malta). Changes in the rates at which consumers have switched over recent years have also differed between countries. The 9% increase in switching rate in Malta between the 2020-22 and 2023-25 periods stands out among the other EU countries, with both Italy and Ireland’s rates falling in recent years. Ireland’s change in rate also differs considerably from its counterparts, with a significant 7% decrease in the switching rate in between the 2018-19 and 2021-22 periods as opposed to only a 0.2% drop in Italy’s rate between 2023 and 2025. Mobile prices in Ireland increased quite considerably between 2019 and 2022, which would typically encourage more switching from customers.
While the mechanisms mandated by NRAs are not vastly different, some do place more of an administrative burden on customers than others, although these burdens have been as minimised as possible in most cases. The UK’s ‘text-to-switch’ mechanism, where consumers are only required to text a number to receive the code needed for switching, is one of the simplest processes. Customers are not required to submit significant personal information and are not required to verify their identity. Similarly, in Ireland, customers are also not required to verify their identity, but they do need to request that their chosen new operator facilitate a switch with their current operator, from whom they will receive an authorisation code. Italy and Malta follow similar customer request mechanisms but differ in the information required from customers. In Italy, customers are required to verify key identification details, which they can provide via evidence of their national identity cards either electronically or physically. In Malta, customers are required to submit a porting form, which includes details relating to the switching process rather than requiring identity verification.
As concern for telecoms fraud has risen, some regulators have strengthened the requirements for customer authentication to prevent port-out fraud, or the fraudulent switching of numbers between operators. In the US, the FCC adopted new rules in 2023 requiring operators to take additional steps to authenticate a customer’s identity before executing port-out requests, including issuing an additional notification of that request to another means of communication for that customer. The rise in port-out fraud has required regulators to reweigh, in some instances, the value of facilitating easy switching for competition against the objective of preventing fraud.
Ofcom has few good options available to it, without risking further unintended consequences
After expressing an eagerness to “look at in-contract price rises again” and that Ofcom undertakes a “rapid review on how easy it is for customers to switch providers”, DSIT has requested a response by 7 November 2025 that outlines how the regulator ensures that consumers are empowered to engage in the market and (most crucially) can get a fair deal. While Ofcom’s own letter can only be expected to present some initial thinking, we consider the options available to Ofcom are limited, and few are good:
Do nothing and rely on a well-functioning consumer switching regime;
Implement an extended (or enduring) right to switch to give consumers longer to exit without penalty;
Limit the number of price increases that can happen during a contract term; or
Ban in-contract price rises entirely.
Option 1 is the least interventionist on this narrow spectrum of potential choices, as well as the most simple and perhaps even the most bold. Here, Ofcom could (and possibly should) explore the different approaches to price rises adopted by its peers in other sectors and countries alongside an assessment of the workings of its own switching rules. However, its switching regime has already been subject to change over the course of Ofcom’s 22-year existence and may offer little room for manoeuvre. Ultimately deciding that current regulation remains fit for purpose (noting that pounds and pence came into effect just 10 months ago) would involve a degree of explanation and push back to the Government, and would reflect Ofcom’s agency as an independent regulator that is not bound to bend to the will of politicians nor that will be impervious to external criticism.
Option 2 would involve a tweak to the current regime of consumer rights to exit contracts without penalty. Ofcom could join other regulators, including Arcep in France and BNetzA in Germany, in extending the period during which consumers may exit their contract without penalty if faced with an unexpected price rise. The regulator could also adopt the approach in Ireland of allowing exit at any point before an unexpected price rise is implemented or once again step out ahead of its counterparts in being the first regulator to establish an enduring or ongoing right to exit throughout a contract term following an unexpected rise. This approach would provide additional flexibility for consumers and address criticism that the current 30-day window for exiting contracts is too short. This option also provides the benefit of consistency, both with the general approach to consumer protection in place today and in aligning with proposals for longer notice periods made through the Telecoms Access Review (TAR). It would not fundamentally change the reality of in-contract price rises for consumers but would advance the objective of consistency in a manner largely aligned with its peers and potentially assist consumers with greater control over budgets moving forward.
Option 3 would again require changes to Ofcom’s existing regulation (and its General Conditions) in order to prevent consumers facing more than one price increase across any 24-month contract. As things stand, a consumer signing up to a 24-month plan in November, for example, would face price rises in two consecutive Aprils before they would reach the end of their term and have the chance to switch without penalty. Limiting price increases would reflect the approach adopted by AGCOM in Italy, where for all new contracts, the application of an inflation-linked price rise may not occur in the first 12 months, effectively ensuring one annual increase on a two-year package is avoided. While this option could, on the face of it, benefit some postpaid customers financially, the impact on the end-to-end price of contracts for new customers and on other types of tariffs is uncertain, while the measure could be complex to introduce from an operator perspective, involving a cross-industry adjustment of prices and contractual conditions.
Option 4 represents the strictest and most radical lever that Ofcom has at its disposal: to ban the use of in-contract price rises entirely. Such a decision would run contrary to more than a decade of policymaking in the EU which has restated consistently that consumers’ should be able to understand and plan for these rises when they’re agreed upfront in a contract’s terms. It also represents a tacit admission that the current pounds and pence system does have loopholes and has already given rise to some unintended consequences in the form of higher price rises for consumers, both expected and unexpected. While an outright ban of in-contract rises would be the simplest and cleanest solution to end this saga, Ofcom nonetheless could again find itself facing unintended consequences: this time for affordability and competition in the mobile market. Consumers would be aware from day one of their contract the price they would pay for the entire term and likely would have been better equipped to compare the value of that contract before signing it. That price, however, could also be higher on day one as operators hedge for potential inflationary pressures in the future – just as they have done already under the pounds and pence regime. Operators would also lose the ability to differentiate their offer on the terms of, or lack of, a price rise, narrowing the competitive playing field further. This option represents a rather blunt instrument with potential consequences well outside the immediate context of concern for the Government.
Above all, Ofcom should recognise that further potential intervention comes with trade-offs and seek to ensure that whatever changes it might make result in a more effective framework in terms of improving consumer welfare, stimulating competition and promoting investment than what it has in place already. Any intervention that does not meet this specific and cumulative test could be an overblown reaction to a storm in a teacup.
