What You Need to Know and How to Manage Costs

The cost of living has affected all areas including phone bills, leaving many consumers questioning what they can do to manage these rising costs. Understanding why phone bills are increasing, how much you should be paying, and what steps you can take to manage your expenses can help you stay on top of your finances.

 

Are Phone Bills Rising?

Most major UK mobile networks increase their prices once a year, typically attaching these rises to inflation indicators such as the Retail Price Index (RPI) or the Consumer Price Index (CPI).

On top of this, networks often add an additional 3-4% to cover the increasing costs of upgrades, maintenance, and service delivery.

For example, a price increase linked to RPI, which in the UK stood at around 8-10% in 2023, would see a considerable hike in phone bills. If your phone bill was £30 a month, a 10% RPI increase plus a 3% network addition could result in your monthly cost rising by almost £4.

This may seem like a small change, but it amounts to nearly £50 more over the course of a year.

Moreover, the potential merger between Vodafone and Three could have further implications for mobile users. If this deal goes through, it could reduce competition, leading to even higher prices for millions of customers as the newly-merged unit may raise prices to consolidate its market position. This would add pressure on consumers already struggling with higher costs.

 

How Much Should You Be Paying?

One of the most important things you can do to manage your mobile bill is to assess whether you're paying a fair price for your service. According to Ofcom, the UK's communications regulator, the average cost for a basic mobile phone contract that includes 100 minutes of calls, 75 text messages, and 5GB of data is £11.51 per month, excluding the cost of the handset. A contract ideal for those who don’t use their mobile phone too often.

On the other hand, heavier users—those who might need 500 minutes of calls, 150 SMS, and 15GB of data—will see their average bill rise to £15.53 per month. While these figures represent the typical costs for consumers, it’s essential to remember that additional charges can apply, especially if you exceed your contract limits or need extra services like international calling.

In addition to understanding average costs, it’s important to recognise how much you're paying for the handset itself. If your phone is included in your contract, you may be paying significantly more than the cost of service alone. Often, users continue paying the same monthly amount even after the handset cost is fully paid off, which means they end up overpaying. If you're in this situation, it may be worth switching to a SIM-only deal.

 

What To Do When Your Mobile Phone Bill Rises?

When your receive notice that your phone bill is increasing your don’t have to accept this, you can take these steps to try and lower the price.

  • Negotiate with your provider: Many mobile networks are willing to offer discounts or alternative plans if you threaten to leave for a competitor. Often, a simple call to your provider's customer service team can result in better deals, especially if you mention cheaper options from other companies.
  • Switch to a SIM-only deal: If you’ve finished paying off your phone, switching to a SIM-only plan can save you a significant amount of money each month. These plans typically cost much less than those that include a handset, and you’ll have the freedom to change providers more easily if necessary.
  • Monitor your usage: Review your phone usage patterns. Are you consistently going over your data limit? Are you paying for minutes or texts that you don't use? If so, switching to a plan that better suits your actual usage could reduce your monthly bill.
  • Consider alternative providers: Smaller or budget-friendly providers can offer cheaper deals than the major networks. Often, these smaller companies piggyback on larger networks' infrastructure, meaning you get the same coverage at a lower price.

 

Compare Companies to Find the Cheapest Phone Bills

If your current provider is unwilling to negotiate a better deal, you should start comparing alternatives. Below are examples of three mobile networks in the UK that offer competitive pricing:

  • Giffgaff: Offering affordable and flexible SIM-only plans, operating on the O2 network with packages starting as low as £6 per month for light users. They do not have contracts on offer which allows you to change or cancel at any time.
  • Tesco Mobile: Using the O2 network, Tesco Mobile offers plans starting at around £7.50 per month for low users. Their "Capped Contracts" feature prevents you from overspending, a handy tool for budget-conscious customers.
  • iD Mobile: Operating on the Three network, iD Mobile offers plans from £5 a month, with some of the cheapest SIM-only deals on the market. Their data rollover feature lets you carry over unused data to the next month, saving you from purchasing additional data.