Letters

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O2 knows it can get away with 39% price rise

I agree with your comment that competition between phone networks is more effective than regulation at keeping prices affordable (Issue 723, page 6), but we don’t really have competition in the UK.

That’s why O2 is confident it can increase mid-contract price rises by 39 per cent without losing many customers.

You often recommend switching to a MVNO, and I agree they have better customer service. But many of them are owned by the big four mobile networks (EE, O2, Three, Vodafone), which thwarts effective competition. For example, O2 owns Giffgaff, Three owns Smarty and Vodafone owns VOXI.

You can choose an independent MVNO such as Lycamobile (which I use), but like all MVNOs they piggyback on one of the big networks. So while they can compete on price, they can’t compete on speed or coverage. And if networks all agree to raise their prices, this affects what the MVNOs have to charge customers.

MVNOs are still better than the big four, but let’s not kid ourselves it’s real competition. What we really need are more main networks to turn the big four into at least six, but that won’t happen because they’ve cornered the market. So, in short, we’re stuffed!

Julian Gough

Scrap Ofcom!

Ofcom needs to be scrapped and a new regulator set up that understands how regulation can backfire. Instead of forcing companies to raise prices in “pounds and pence”, it should have stipulated that they can put up their prices by a certain amount a month, up to a maximum of four per cent of the existing contract price. That would keep price rises lower for customers on the cheapest contracts and avoid the absurdity of O2’s flat rise of 39 per cent.