KPN is set to increase its rates by 3.6 percent this month, while Vodafone will raise its rates by 3.3 percent. For instance, if you currently pay 25 euros per month, your bill will rise by approximately 80 to 90 cents. These increases apply only to customers with a mobile subscription who signed their contracts before July 1 of this year.
“Inflation adjustment is a common method to offset rising costs,” explains sector economist Mark van Kampen from Rabobank. “At the same time, it helps telecom companies maintain a relatively stable financial position in a market with limited growth.”
“As long as the inflation adjustment is clearly stated in the contract and meets transparent criteria, there is nothing legally problematic,” clarifies corporate law attorney Maarten Mussche. “Inflation adjustment could even benefit consumers, for example, if a supplier does not factor in cost increases upfront but instead corrects them afterward.”
According to ING sector economist Jan Frederik Slijkerman, the prices of mobile subscriptions have hardly changed in recent years. However, consumers are receiving more gigabytes of data or higher internet speeds.
Slijkerman notes that the largest expenses for telecom providers include personnel, the network with all its antennas, and advertising costs, all of which rise significantly each year.
“The profits of telecom providers in Europe increase by an average of about 1.5 percent per year, but this is less than the rate of inflation,” he calculates. “Profit growth is primarily achieved through cost savings and reorganizations within the workforce. Inflation adjustment is just a minor component of this.”
While the three experts understand the economic rationale behind implementing inflation adjustments, there is also a societal discussion to consider.
“It is understandable that people question price increases during a fixed contract period. You believe you have agreed on a fixed price, only to be confronted with a price hike,” outlines Van Kampen. “Especially when you can renew your contract at a lower price due to promotions or offers at the end of your term.”
