Government Slams O2’s Surprise Mid-Contract Price Hike as Ofcom Asked to Revisit Rules

The government has expressed disappointment after O2 announced an unexpected mid-contract price rise of £2.50 a month, sparking renewed scrutiny over how mobile providers handle in-contract pricing.

Technology Secretary Liz Kendall described the move as “disappointing given the current pressures on consumers” and has urged Ofcom to review its rules around price increases during fixed-term contracts.

In her letter to Ofcom’s chief executive, Dame Melanie Dawes, Kendall said the regulator should “go further, faster” to ensure customers aren’t caught off guard by mid-contract hikes. She’s asked for a rapid review into how easy it really is for customers to switch providers, especially when faced with sudden changes like this.

O2 insists it has played by the rules. The company said it was “fully transparent” about the increase and is offering affected customers 30 days to cancel their contracts without penalty, though they must still pay off any remaining handset costs. O2 added that the increase, roughly 8p a day, is necessary to fund its £700m annual investment in network improvements.

However, critics argue the rise goes against “the spirit” of new regulations introduced in January, which were meant to prevent hidden or surprise price changes. Under those rules, telecom companies must clearly state in pounds and pence how much bills could rise during a contract.

O2 had previously said its 2026 price rise would be £1.80 a month, but the latest update increases that figure to £2.50.

Consumer groups say that’s not good enough. Tom MacInnes from Citizens Advice argued, “Fixed should mean fixed. If one company can get away with this, others could follow. It’s time for Ofcom to ban mid-contract price rises for good.”

Telecoms analyst Paolo Pescatore of PP Foresight pointed out that UK network operators are under financial strain as margins shrink and infrastructure demands grow. But he also noted it’s “highly unlikely” other providers will follow O2’s lead given the backlash this move has already triggered.

Ofcom has until 7 November to respond to the government’s concerns. For now, one thing is clear: the battle over fairness and flexibility in mobile contracts is far from over.