Tesco Mobile's fixed price promise


Tesco Mobile announces a price promise today to fix customers' monthly tariffs at the same rate for the duration of their contract.

In announcing the move, Tesco accuses its competitors of raking in £217m of consumers money through sneaky price rises during their mobile phone contracts.

So you sign up to a mobile phone contract, agreeing to pay, say £30 a month for 18 months, and that's what happens, right?

Well no, that's not the case as mobile phone networks often carry our mid-contract price rises, which 70% of consumers are completely unaware off, according to research from Tesco.

Rising bills
Figures from price comparison site, uSwitch.com, show almost half (48%) of mobile phone customers overspend on their bills every month, averaging an extra £100 of the course of a year.

Common reasons include calls to premium rate numbers, roaming charges whilst abroad and text entries to TV voting shows - yet the networks are also to blame due to hiking prices after customers have signed on the dotted line.

"Many consumers have been left feeling misled and out of pocket after signing up to a fixed-term contract, only for the price to go up in the middle of it. Even small increases can be a big burden to cash-strapped consumers," said Adam Kirkby, telecoms expert at uSwitch.com

Fixed prices
With prices rising by a median of 81p a month, Tesco Mobile estimates that in one year alone, UK consumers have spent around £217 million extra on their phone bills.

Now the supermarket phone network, which is powered by competitor O2, is breaking from the pack by committing to never raise its customers tariff prices mid-contract.

Simon Groves, chief marketing officer of Tesco Mobile said: "We believe it's only fair to stick to the contract that we make with our customers, and see no reason to change the core tariff price that a customer has signed up to."

Competitive move
Tesco's decision certainly makes it attractive to customers, who are likely to favour the security of a fixed price deal for the duration of their contract over the risk of potential price rises from other networks.

Earlier this month, EE announced an option for its customers to fix their contract price for a small premium. It also promised to clarify to consumers at the point of sale that the price of regular mobile phone bills can vary over the course of the contract.

Ernest Doku, telecoms expert at uSwitch.com, said: "Following EE's announcement, this move from Tesco arguably goes one step further – by ensuring that customers automatically benefit from no price rises, rather than by opting in and paying a premium.

"By ensuring that all plans have a fixed price for their duration, it brings some much-needed clarity and reassurance."

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