Mobile providers push prices up under VAT cover

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A number of mobile companies have used the VAT rise as an opportunity to increase prices by as much as 150 per cent, a report has indicated.

A number of major providers have chosen to lift prices higher than the 2.5 per cent increase ordered by the Government earlier this month, uSwitch suggested.

For instance, 3 has decided to increase the cost of calls from 12 pence to 30 pence per minute and the cost of texts from 12 pence to 30 pence per text for new customers going outside of their allowance, representing a 150 per cent increase.

Furthermore, 3 customers who are not on the One Plan will be charged for voicemail, whilst anyone opting for paper bills will be charged an extra 50p to pay £1.50 a month.

Over at O2, pre-pay customers will have to deal with a 20 per cent rise in the cost of text messages.

Roaming Vodafone customers, meanwhile, will be paying an extra one pence for either making a call within Europe, receiving such calls or sending a text whilst on the continent.

“These increases will be a bitter pill to swallow for the many consumers trying to stay afloat amid the VAT hike,” said Ernest Doku, communications expert at uSwitch.com.

“The cost of a text going up by two pence may not sound like much, but the cumulative effect on a monthly bill can be substantial.”

He advised customers to review their contracts and change to a better deal if possible.

O2 said it made the changes simply because it wanted to limit any potential confusion amongst customers.

“Adding 2.5 per cent onto calls and texts would lead to fractions of whole numbers (e.g. texts would become 10.2 pence from 10 pence),” a spokesperson told IT PRO.

“We want to keep the price of texts and calls on Pay & Go simple and easy to understand. Making the change this way means that all other charges for our Pay & Go customers were unaffected by the VAT rate change.”

The spokesperson also noted customers had been told via text how the changes would affect them.

"We have passed the 2.5 per cent on, in many cases we have absorbed the cost," a Vodafone spokesperson told IT PRO.

At the time of publication, 3 had not responded to requests for comment on the uSwitch findings.

Earlier this week, T-Mobile came under fire for cutting its data allowance to 500MB and later backtracked to say the changes only applied to new and upgrading customers.

Read on for our report on how the VAT rise could affect businesses across the UK.

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