Virgin Media and O2 customers stuck between price rises and shocking exit fees
Our latest research shows that customers of Virgin Media and O2 face a lose-lose choice this April - more mid-contract price rises for their broadband and mobile services, or crippling exit fees.
Virgin Media and O2 are expected to press ahead with price rises of 8.8% in April - the providers base their increases on the retail price index (RPI) rate of inflation as published in February (4.9%) plus an additional 3.9%. These price hikes will be the highest in percentage terms of all of the major broadband and mobile firms.
For those who are mid-contract, the only alternative is to pay an exit fee to end the contract. These fees can be exorbitant - our analysis shows that a customer of both Virgin Media and O2 could face a fee as high as £692.37 if 12 months were remaining on their contracts with the two providers. Since the companies merged, Virgin Mobile customers were migrated to O2 and the providers began offering bundled deals.
These price rises come despite Which? calling for telecoms firms to halt their plans for price rises and Ofcom, the telecoms regulator, proposing a ban on inflation-linked price hikes.
See how Virgin Media compares to the best and worst broadband providers or find out how O2 stacks up in our mobile network reviews.
How much will Virgin Media and O2 bills be rising?
Based on our nationally representative survey of broadband customers and mobile market data, we calculated how much an in-contract Virgin Media or O2 customer could see their payments rise by this year.
- Virgin Media customers face the largest hike - both as a percentage and in pounds and pence - out of any of the major broadband firms, due to the provider's use of RPI. The average Virgin Media will see their annual broadband bill increase by £39.14.
- The average O2 Sim-only mobile customer faces a £26.44 annual price hike - the highest increase of any mobile network by percentage. This is higher in pounds and pence than EE and Three, though slightly less than Vodafone which has higher prices overall on average. It is also higher than the UK average of £20.76. O2 only ever bases its price increases on the airtime portion of a customer's bill (i.e. minutes, text messages and data) - if you have a contract that includes a phone too, the cost of the device will not increase.
While most other providers use the consumer price index (CPI) as their base for price increases, adding an additional 3-3.9%, Virgin Media and O2 use the retail price index (RPI) measure instead, which is usually higher, plus they now also add an additional 3.9%. O2 customers who took out their contracts prior to March 2021 will pay increases based on RPI-only. The Office for National Statistics (ONS) has said that RPI is not a good way to measure inflation as it's likely to inaccurately estimate price changes.
Colin Smith, 74, told us that he received correspondence from Virgin Media in autumn last year informing him of a change in the terms and conditions of his contract - a new clause would enable mid-contract price rises. He has been a Virgin Media customer for 10 years and, while he was given the option to exit the contract penalty-free in the first 30 days from when he first received his letter, he is now trapped.
He said: 'As a pensioner my income is fixed. When it comes to contract renewal, I'm looking at every penny. My gas and electric bills are a lot higher than they were. I've got a smart meter and can see the money stacking up. Every penny saved on broadband, I can spend on heating my house.'
Use our price rise calculator tool to see how much your bills might be affected in April.
Mobile and broadband price rise calculator
Use our free tool to find out how much your broadband or mobile bill could increase in April, as a result of the confusing inflation-linked price hikes we're campaigning against.
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What is your current monthly payment for this service?
*If your mobile bill shows a separate cost for your airtime (data, minutes and messages), use this figure.
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Virgin Media and O2 exit fees
Because these annual price rises are part of consumer contracts, customers have no choice but to pay the new, higher amount or to stump up for an eye-watering exit fee to terminate their contract - even though the price rises are based around inflation figures customers usually have no way of predicting when they first sign up.
We calculated the exit fee the average customer of each provider with 12 months remaining on their contract would face so the annual price increases can easily be compared against the potential termination fees.
Our analysis shows that if the average Virgin Media customer didn't want to pay a higher tariff as a result of this year's price hike, choosing to switch away instead, they would face an exit fee of £403.91 if they were to leave their contract 12 months early. Virgin Media previously had an exit fee cap (of £288) but this is only in place for customers who took out a deal prior to 4 April 2023.
Exit fees for O2 customers can also be exorbitant. If the average O2 customer wanted to switch away rather than accept this year's price rise, they would face an exit for of £288.46 if they were to leave their contract 12 months early.
If you're out of contract, remember that you don't have to accept any price increase - you're free to ditch your provider and switch at any time. Use our broadband comparison service to explore new broadband deals available where you live, to see if you can find a better deal.
Ofcom's proposal to ban this type of price rise
Following campaigning from Which?, regulator Ofcom announced it is planning to ban mid-contract price rises that are linked to inflation later this year.
Ofcom’s review of the pricing practice concluded that inflation-linked mid-contract price rise terms can cause substantial consumer harm by making it more complicated to choose a broadband or mobile deal, limiting consumer engagement in the market and reducing competition in the industry.
We think it is unconscionable that broadband and mobile providers are still planning to go ahead with this year's inflation-linked price rises, which will impact millions of people, even after the regulator declared this practice causes substantial consumer harm and proposed a ban. We're calling for all providers, including Virgin Media and O2, to scrap this year's hikes to implement Ofcom's proposals as soon as possible so new customers are not trapped in these unfair contracts.
Ofcom should also press ahead with its positive move to band inflation-linked price rises which will prevent customers facing these unfair and unpredictable price hikes.
Rocio Concha, Which? Director of Policy and Advocacy, said: 'Virgin Media and O2 customers face a lose-lose choice between huge price hikes and crippling exit fees. This comes on top of up to 17 per cent increases faced by some O2 customers last year - few would have anticipated such steep price rises when they signed up.
'Ofcom has clearly stated that the practice of inflation-linked mid contract price rise terms can cause substantial consumer harm. Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.'
How Virgin Media and O2 responded
A spokesperson for Virgin Media and O2 said that the amount the company receives from price rises is outweighed by the £5m it invests each day to upgrade its networks and services. They said the analysis from Which? shows the company offers excellent value and that independent analysis has shown the cost of telecoms services overall have fallen by a fifth since 2017, while speeds and usage have increased.
Virgin Media
Price increase is based on the average amounts paid by customers in a December 2023/January 2024 survey of 3665 people who had a contract for a home broadband service (including broadband and phone). Data includes a nationally representative sample.
Exit fees*
To calculate the exit fee payable for a Virgin Media customer, we took a hypoethical customer who has 12 months remaining on their contract at the point where prices are set to rise. Thise made the figures for annual price increases and exit fees comparable.
We used the average amount paid by Virgin Media customers as per out nationally representative survey and followed the example calculation for early termination charges on Virgin Media's website, which is: one month of standard pricing, plus the remaining months, discounted. The extent of the discount varies depending on whether you are paying the standard price or on a discounted offer. A customer within their minimum contract period is likely to be on a discounted offer. The most generous discount offered by Virgin Media is to reduce the tariff to 90% of the original fee, so we opted for this.
O2
Price increase is based on an estimate of the average price of a new Sim-only contract calculated using a market database and weighted using Ofcom data on market share and the amount of data individuals have within their contracts. The overall market average represents out estimate for at least 95% of the UK mobile network market. The data was collected on 16 February 2024 and doesn't include out of contract prices.
Exit fees*
O2 calculates it early termination fees as follows: monthly tariff cost, multiplied by the number of months remining in your Minimum Period, minus 4%. Most contracts last 24 months, though 12 month and rolling (30 day) options are also available.
*note that exit fees may also sometimes be waived or are not payable in individual cases, for example where there have been persistent faults with the service or where the provider is in breach of another significant term of the contract.
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