Vodafone responds to Ofcom phone contract proposals, 'risks generating significant confusion'

Earlier today, independent UK communications regulator Ofcom announced that it would be looking into the practice whereby mobile, broadband and landline network providers can raise prices midway through a pay-monthly mobile phone contract, with no way for a customer to object.

As Pocket-lint reported in a dedicated story, Ofcom's proposal is to allow a customer to exit his or her contract without penalty if a price has been increased during the fixed term of that contract. It is a proposal that could shake up the mobile phone industry especially.

Vodafone, which would obviously be affected by such an enforcement, has now responded by saying that the Ofcom proposal could potentially force providers to raise their prices initially, with the regulator not taking into account the way the industry works.

Vodafone has told Pocket-lint that it doesn't control many of the charges faced by consumers, and that third parties are equally to blame for price hikes.

"We support Ofcom's desire to give consumers reassurance about the prices that they will pay during their contract, but the regulator's proposals risk generating significant confusion and potentially increasing the cost of getting a mobile phone contract for millions of people," the company said in an authorised statement. "As such they could damage what Ofcom's own research shows is the best-value mobile phone market for consumers anywhere in Europe.

"We believe there is work to be done to ensure that customers understand the need for long-term contracts and to ensure they are protected during that time, but Ofcom first needs to understand the difference between the prices that are set by mobile phone companies and those which are not.

"We simply do not control many of the charges faced by consumers. They are set by third parties and mobile phone companies have to pass those costs on or they will be subsidising other companies. Prices set by third parties such as BT, include those for directory inquiry services, premium rate and 08 numbers. Yet Ofcom appears resolved to introduce measures that would effectively prevent any rises in these prices being recouped while customers are still in contract.

"We cannot be held accountable should BT, for example, put up the price of calls to premium rate, 08 or its 118500 numbers. Nor can we be expected to swallow that sort of price rise ourselves."

Vodafone also said the new proposals could see the mobile phone market revert to old methods, whereby different providers would charge different rates for different services.

"Under Ofcom's proposals new customers could find themselves paying different prices for different services depending on which third party has recently increased its prices. At a time when both the regulator and consumer groups are calling for prices to be simpler to understand, Ofcom's proposals could take the industry back to a time when consumers were faced with a bewildering array of prices for calling different numbers.

"Ofcom itself admits that if its proposals are carried out, they could result in the up-front cost of using a mobile phone actually increasing as mobile phone operators will have to try and second guess what price increases third parties will attempt to introduce."

Vodafone added: "As this is the start of a consultation on the issue we will of course be engaging with Ofcom to see how they intend to prevent price gouging by third parties, widespread consumer confusion about prices and increases in the up-front cost of getting a phone."