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(Pocket-lint) - UK independent communications regulator Ofcom has announced that UK mobile phone and landline network providers will have to allow customers to cancel their contracts without penalty if their monthly subscription prices are raised.

According to the ruling, networks will have to give 30 days' notice to customers that they are raising prices during which time the customer can cancel their contract. Previously, if you were locked in a 24-month contract and wanted to cancel early for whatever reason, you were obliged to pay the remainder of the contract.

The ruling also applies to small businesses - firms with fewer than 10 employees.

It will come into force in three months time, on 23 January.

"Ofcom is today making clear that consumers entering into fixed-term telecoms contracts must get a fairer deal. We think the sector rules were operating unfairly in the provider’s favour, with consumers having little choice but to accept price increases or pay to exit their contract," said Claudio Pollack, Ofcom's consumer group director.

"We're making it clear that any increase to the monthly subscription price should trigger a consumer's right to leave their contract - without penalty."

Ofcom started consultation on the new guidance in January this year, which prompted Vodafone to counteract with a statement. At the time, the network said that the new proposals would actually increase prices at point of sale.

"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 to second guess what price increases third parties will attempt to introduce," it said.

Writing by Rik Henderson.