Business
Calls for ‘outright ban on absurd’ mid-contract telecoms price rises
Ofcom is facing calls for an “outright ban” on “absurd” mid-contract price hikes after the Government separately asked the regulator to revisit its rules on the practice.
The calls follow O2 unexpectedly announcing it was raising prices by £2.50 a month for existing customers.
On Monday, Technology Secretary Liz Kendall wrote an open letter to Ofcom bosses asking them to review mid-contract price rises again.
She wrote: “As we discussed when we met earlier this month, driving down inflationary costs and protecting consumers are vitally important for this government.
“As such, I welcome both the action you took in January to increase transparency on how in-contract prices are presented in new contracts, and your statement yesterday expressing disappointment with O2’s price rises.
“I strongly agree they are against the spirit of your previous changes on pricing, and all the more disappointing given the current pressures on consumers.”
She added: “Nevertheless, I believe we need to go further, faster. I am keen that we look at in-contract price rises again.”
Ofcom has been given until November 7 to respond to Ms Kendall’s letter.
Ofcom said: “We share the Government’s concern that customers who face price rises must be treated fairly by mobile providers and they are empowered to exercise their right to switch penalty-free if they didn’t agree to them upfront.
“We will respond to the Secretary of State’s specific queries shortly.”
O2 said in a statement: “We appreciate that price changes are never welcome, but we have been fully transparent with our customers about this change, writing directly to them and providing the right to exit without penalty if they wish.”
Ofcom introduced new rules in January to crack down on phone and broadband providers increasing prices in the middle of a contract without warning.
But last week, O2 announced it would be raising its monthly prices by more than originally promised.
It was able to do this because the increase was not linked to inflation, and it has given customers 30 days to leave without penalty providing they continue to pay off the cost of their device.
O2 said it has not gone against the regulation and Ofcom’s rules do not stop providers from raising prices.
The firm said: “A price increase equivalent to 8p per day is greatly outweighed by the £700 million we invest each year into our mobile network, with UK consumers benefitting from an extremely competitive market and some of the lowest prices compared to international peers.”
Alex Tofts, broadband spokesman from comparison site Broadband Genie, said: “What we’re seeing from O2 and price rises from other major providers is a direct result of crude regulation that has been poorly thought out, with its implications not given enough consideration.
“The only real way to protect customers is to outright ban these absurd mid-contract price hikes. Some providers already offer fixed prices, so why can’t those with the biggest profit margins do the same?
“We fully back the call for Ofcom to revisit these regulations. Until then, we urge all consumers to check whether they’re still in contract.
“To be fair to Ofcom, the broadband switching process has become much easier thanks to the One Touch Switch system. One-in-three households are currently free to switch, and with many providers offering competitive new-customer discounts, now could be the best opportunity to protect your budget before further price rises take effect.”
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Target faces a new boycott over ICE response as retailer presses ahead with turnaround
A major teachers’ union is calling for its members to skip Target when buying back-to-school supplies, the latest twist in a series of boycotts that have targeted the big-box retailer as its turnaround shows signs of life, CNBC has learned.
The AFT, or American Federation of Teachers, passed a resolution Thursday that calls on its 1.8 million members and others to shop at local stores and not at Target, saying the company did not respond adequately to the surge of federal immigration enforcement in the retailer’s hometown of Minneapolis this winter. Federal agents shot and killed two U.S. citizens, Renee Good and Alex Pretti, during the operation.
The labor union, which is affiliated with the AFL-CIO, plans to urge a similar resolution at AFL-CIO’s convention in Minneapolis this summer and at conventions held by other organizations, including the NAACP and LULAC, AFT President Randi Weingarten said.
Target declined to comment specifically on the AFT’s resolution but said in a statement that it has “a longstanding commitment to strengthening the communities we serve,” including donating 5% of profits since the company’s founding and offering a discount to educators as part of a teacher appreciation program.
Target’s annual sales have declined for the past three years in a row, but the company’s new CEO Michael Fiddelke laid out an ambitious plan earlier this month to refresh its stores, add more enticing merchandise and return to sales growth. The retailer said it expects net sales to rise about 2% this fiscal year compared with the prior year and anticipates sales will grow every quarter.
It is unclear if and how much the AFT’s call for a back-to-school boycott could hurt Target, which is trying to win back customers. Earlier this month, Atlanta area pastor Jamal Harrison Bryant announced the end of a yearlong boycott of the company, called Target Fast, which had started because of the company’s rollback of major diversity, equity and inclusion initiatives.
At a press conference, Bryant said Target has demonstrated its commitment to the Black community with investments in Black businesses and donations to Historically Black Colleges and Universities. Yet other activists leading a separate boycott, including former Ohio state Sen. Nina Turner, have said they continue to call for shoppers to steer clear of Target.
The AFT previously supported and participated in the Target boycott over its DEI rollback.
The retailer has attributed some of its sales losses to backlash to its DEI decision, along with other factors including company missteps with merchandise, a weaker store experience and softer discretionary spending.
At an investor meeting in Minneapolis in early March, Fiddelke stressed that it’s “a new chapter for Target.” He said the company is “doing the work to build connection with new guests, deepen relationships with existing guests and earn back trust with guests we’ve disappointed.”
In a separate email to Target employees earlier this month, Fiddelke highlighted how the retailer is putting its strategy into action, including through its move to cut prices on more than 3,000 items and the opening of its 2,000th store. He said Target has made progress with winning back trust, too, noting the end of the Target Fast boycott.
He said Target has had “ongoing conversations with the organizers” of the boycott, who have “acknowledged the meaningful contributions Target has made, and will continue to make, to the Black community.”
In an interview with CNBC, Weingarten said the AFT’s boycott is focused on what she called Target’s lack of response to the surge of aggressive and violent immigration enforcement in its own backyard. Weingarten said the AFT sent a letter to Target and met with Target staff to encourage them to speak up before the union moved to pass the resolution.
“Target was negotiating with our colleagues in the civil rights community for weeks and weeks and weeks,” she said. “They could have very easily dealt with both [concerns about DEI and immigration enforcement] and they chose not to.”
She said Target is “more worried about standing with the Trump administration than the communities that made them a profitable company.”
Fiddelke joined dozens of executives from Minnesota-based corporations in co-signing a letter in late January calling for an “immediate de-escalation” in the state after the fatal shooting of Pretti. However, the letter did not name the shooting victims Pretti or Good or call out the president, his immigration policies or federal agents.
Fiddelke also shared a video message with employees that more directly acknowledged current events, but stopped short of calling for ICE agents to leave the city or for accountability in the two shooting deaths.
Weingarten described the CEOs’ letter as “insulting” and said it “basically blamed both sides.”
She said the union, which includes many teachers, can have the greatest financial impact during the back-to-school shopping season this summer and fall. By passing the resolution now, she said, the AFT can get the word out to members and “give Target enough time to come back to its senses.”
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