T-Mobile UK has told its contract customers that their bills will be going up 3.7% from 9 May, to meet the operator’s rising costs of doing business. It said it had to take the measure due “to rising costs of the business linked to inflation”.
From 9 May, contract customers who joined T-Mobile prior to February 2012 will see their price plans increase by “not more than 3.7%” – the rate of inflation measured by the UK’s Retail Price Index, a page on T-Mobile’s customer support portal said.
T-Mobile said that contract terms and conditions allow it to raise prices within the range of the RPI, meaning that any customers wishing to cancel their contracts as a result would face the full exit penalties for doing so.
The price rise will not affect new customers on the carrier’s new “Full Monty” or You Fix contracts, or customers who renewed on one of those contracts since February 2012, as the operator said that this tariff had already factored in the effects of inflation.
The “majority” of its customers would be affected by this change, T-Mobile said.
Although T-Mobile is linking the price rise to inflationary pressures on its own costs of doing business, the price rise highlights a key challenge facing all operators – that at some point customers will have to pay prices for data that are more in line with the operators’ costs of carrying that data.
Explicitly communicating a price rise to customers is a dangerous PR game, but T-Mobile obviously feels it is a move worth making.
It deserves, perhaps, some marks for honesty (although some might say the “it’s not us it’s the inflation, honest” message is perhaps a little disingenuous), but no doubt many working in T-Mobile will be waiting with trepidation for the first “No price rises here” counter-marketing campaign from a competitor.
Orange UK, T-Mobile’s co-opetitor within Everything Everywhere, announced a 4.3% price increase for all existng contract customers in November 2011. That resulted in a consumer backlash that saw the number of complaints made to Ofcom about the operator double, and pushed Orange to first place in Ofcom’s list of “most complained about” mobile operators.
UPDATE: 15:25pm
Mobile Europe contacted T-Mobile for more details on the reasons for the price rise. A spokesperson said, “We appreciate that this is not great news for our customers and we do not make price increases lightly. Unfortunately, due to the rising costs of the business linked to inflation and our desire to continually invest in our network and propositions to provide the best service for our customers, the increase is necessary.”
T-Mobile also provided Mobile Europe with the following statement:
“We are sorry to say that we will be increasing the price of some of our monthly plans by 3.7% from 9th May 2012. On a £15 plan, this would represent a £0.55p monthly increase.
The increase is a result of the rising costs of the business, linked to inflation, as well as our desire to continually invest in our network and propositions to provide the best service for our customers.
Call, text and data rates will not be changing, and we are confident that we continue to offer our customers great value, rewarding deals, and the best network and service possible.
Between 28th March and 3rd April 2012 all customers affected by the price increase will be contacted by letter with the full details. They will also be directed to a dedicated web page with an online calculator and frequently asked questions page for more information.”