Philip Jansen, chief executive of the telco, said the forecast price rise of 13% – adding £53 to the average bill – would “absolutely” go ahead in April because the difficult economic environment and rising costs had not left the company without option. The business is also facing a workers’ revolt over wages, with union members on strike on Friday and Monday. It puts BT at risk of a clash with industry watchdog Ofcom, which is preparing to crack down on misleading small edition charges. Sources say the review of pricing practices has intensified in light of the inflationary crisis. Mr Jansen’s decision to move on is likely to raise fears that the cost of living will continue to rise next year despite the Bank of England’s efforts to bring it under control, with energy bills and train fares already expected to rise sharply in January. . BT’s customer contracts state it will raise prices every year by inflation plus 3.9%. Analysts expect inflation to be around 9% in early 2023, meaning customers face a 13% increase in their bills. This would add around £53 a year to the cost of a standard BT Fiber Essential package, the cheapest standard broadband and phone tariff costing £33.99 a month. The price increases apply to the company’s broadband, EE mobile and BT Sport packages. With other broadband providers likely to introduce similar price increases next year, sources said Ofcom was stepping up its review of the fine print of annual rate rises, particularly if consumers were fully aware their monthly bill could rise during their registration. There is no evidence that BT has broken any rules. Mr Jansen said he was optimistic that inflation “would be on the low side”. Nadine Dorries, the Digital Secretary, took telcos to Downing Street in June to discuss the cost of living crisis, meeting executives from TalkTalk, BT-owned Openreach and Vodafone. Ministers are concerned that not enough people are benefiting from reduced prices for those on the lowest incomes. Above-inflation price increases were also criticized by officials. A government source said: “Companies need to think hard about the impact of price rises on hard-pressed consumers and we urge a continued focus on supporting the most vulnerable.” Mr Jansen defended the price increase, which is written into customer contracts, saying the company still offered “absolute value for money”. He added: “People are realizing that inflation is very high and continuing and we have economic uncertainty and the prospect of a recession.” In April this year, the company increased prices on most of its packages by 9.3%. Consumer advisory groups branded the increase a “work-from-home tax”. Many mobile phone and broadband companies include price increases above inflation as part of their deals. Vodafone and O2 also have clauses that threaten to push bills up more than inflation next April. Opponents have lobbied Ofcom to investigate these annual price rises. A spokesman for fellow provider Hyperoptic said: “Ultimately these clauses mean a customer is not in a position to know how much they will pay over the life of their contract. We don’t think that should be allowed.” Planned price rises next year will pile further pressure on household budgets after a grueling winter, with average energy bills likely to hit £500 in January alone, according to research by consultancy BFY. Rail ticket prices are also linked to inflation and earlier this year commuters were hit by the biggest price rise in a decade. A further double-digit rise is likely next year. Ofcom research found that 2 million households are struggling to afford their broadband costs. An Ofcom spokesman said: “Our rules require companies to clearly set out price increases before customers sign up. they can’t just include them in the fine print. We are monitoring this area closely and checking that providers are disclosing any price increases in accordance with our rules.” Mr Jansen said the company would continue to offer a basic ‘Home Essentials’ package, which costs £15 a month, for those on Universal Credit. The company has not decided whether to increase the price of this package for 2023. Broadband and mobile providers argue that consumers are getting a fair deal as the total amount of data they get for every pound they spend increases. A BT spokesman said: “Our annual price increases are limited and we make this clear when customers sign up.” Rocio Concha, director of policy and advocacy at Who?, said: “The news of further increases from BT will come as a shock to customers, many of whom are already struggling during the cost of living crisis.” His comments came as BT reported its first revenue rise in five years. Revenue rose 1% to £5.1bn for the quarter to June, although the company missed its targets for business customers and pre-tax profits fell 10% to £482m. Labor and raw material costs have risen, including the cost of fiber optic cables, driving up charges for network operators such as BT’s Openreach division. Shares fell 9.6% on Thursday. Mr Jansen said the company’s fiber broadband deployment had exceeded his expectations, with more than 8 million premises now connected. The results come as the company prepares for a strike by the Communications Workers Union after failing to reach a pay deal. The union said it would continue to maintain some essential services as normal, such as 999 calls. Mr Jansen said there were “no winners” from the strikes. It is the first national strike by telecommunications workers since 1987. BT offered staff a £1,500 pay rise, around 5%, which unions dismissed as “arrogant”. Mr Jansen said: “I’m really sad about it,” but added that he appreciated the union making an exception for critical 999 calls. Around 40,000 staff are set to walk away. On Thursday, the union hit out at the price rises, saying: “No price rise while making a profit. It should be that simple.” BT’s chief executive received a 32% pay rise last year to £3.5m, due to previous share awards.
