Broadband price hikes are on the way for Irish households
Most customers of Eir and Vodafone will see their bills go up by 7.6% as the companies implement what they call ‘annual price adjustments’.
Inflation may be continuing to ease in Ireland, but all that means is prices are rising at a slower pace. They’re still rising.
We can expect several substantial bill increases from several key telecommunications providers this month.
Last week’s March bulletin from the Central Statistics Office (CSO) told us the EU Harmonised Index of Consumer Prices (HICP) increased by 1.7% in the 12 months to March 2024. This compares to an inflation rate of 2.3% in the 12 months to February. These adjustments were fuelled by energy and food price decreases.
Food prices are estimated to have decreased by 0.1% in the last month and risen by 2.6% in the last 12 months, while energy prices are estimated to have fallen by 3.1% in the month and decreased by 8.4% over the 12 months to March 2024.
Good news, right?
Yes, but these figures are only part of the story.
Starting next week, most customers of Eir and Vodafone will see their bills go up by 7.6% as the companies implement what they call "annual price adjustments". Under this policy, bills go up each April by the annual rate of inflation as of January, plus an additional 3%.
Customers of Three see their prices go up by a flat 4.5% each April regardless of the rate of inflation.
Daragh Cassidy of Bonkers.ie believes these hikes are controversial as they amount to ‘price signalling’ under the Competition and Consumer Protection Commission’s (CCPC) own definition.
According to the CCPC, price signalling occurs when businesses make their competitors aware they intend to increase prices.
"Price signalling can happen in public, through announcements or comments on prices, or in private through direct contacts between companies.
In 2021, the CCPC completed a price signalling investigation into the private motor insurance industry, securing legal commitments from six motor insurers on a range of compliance reforms.
Then there’s ‘price walking’. This is a pricing strategy whereby loyal customers who stay with the same insurer for many years gradually end up getting charged higher and higher prices at each renewal.
In other words, their loyalty is penalised and they end up paying a so-called 'loyalty premium'.
In 2022, the Central Bank banned price walking in the home and car insurance market.
“We’re in the bizarre situation where telecommunications providers are engaging in both price signalling and potentially price walking. This is despite the fact that price signalling is against the law and price walking has been banned by another consumer body — the Central Bank of Ireland,” Mr Cassidy said.
He believes the CCPC and the communications regulator, ComReg, should clearly state and explain their position on this as soon as possible.
“I feel they’re both asleep at the wheel here. To be honest, I’m more disappointed at them for not doing their jobs properly than I am at the providers who have upped their prices.
"I understand that telecommunications providers need to invest heavily in their networks and will, like all businesses, have to increase their prices from time to time.
“But price signalling is ultimately bad for competition and bad for consumers and should not be tolerated in any form.
In announcing the 7.6% price hike, Vodafone said: "We understand that changes to price are never welcome, but like many other businesses, we are faced with growing pressures due to inflation and increased demand to invest in our network so we can deliver reliable connectivity and the best customer experience possible."
To restate, the company is not adjusting upwards in line with inflation, it is adjusting upwards and adding on an additional 3%, and Eir is doing the exact same thing.
Despite what Vodafone terms "growing pressures", Vodafone Group Plc reported profits for 2023 of over €12.3bn.
Broadband and TV provider Virgin Media also announced last month it was hiking its prices for Irish customers. From May 11, both broadband and TV services provided by the company will rise by €4 a month for some customers. The company imposed a similar price hike last year.
Sky, meanwhile, is hiking its prices by an average of 4.1% on some of its products.
Households looking to offset these price increases are being advised to compare prices and switch to a new provider as there is still very good competition for new customers.
The prices the main broadband and TV providers offer new customers have remained relatively steady over the past few years, whereas prices for existing customers have increased by more. So there really is a lot of value to be had by switching.
Daragh Cassidy again: “A household could easily save €40 or €50 a month on their broadband and TV bills for an entire year by switching.
Many of us will jump through hoops to shave €40 or €50 a year off our car insurance. So it’s a no-brainer to look at switching your broadband and TV when you could save a multiple of that over the course of a year.”
As if all of this were not bad enough, we are also dealing with the recent hikes at petrol station forecourts.
On the first of this month, a litre of petrol rose by 5c, with diesel jumping by 4c, as the Government looks to fully restore excise duty on fuel which was parked two years ago to offset the rising cost of living.
On top of this, motorists can expect three further price hikes this year, bringing the total increases to 14c for petrol and 12c for diesel.
The first of those kicks in this August, which is the final phase of the Government’s excise restoration programme.
Prices will also rise from planned hikes in carbon tax in October’s budget, with an increase in the biofuels component of transport fuels set to impact costs further.
Despite calls for a further delay in fuel excise hikes — which were postponed in October until now — the Government has reaffirmed its commitment to restoring the excise duty.
Don’t expect any major collapse in inflation for the rest of the year.
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