Market Power - OFCOM investigates mobile phone and broadband suppliers over pricing

OFCOM have decided to investigate mobile phone and broadband suppliers who introduce price increases mid-contract.

To the untutored, but economic eye, this seems grossly unfair because the suppliers are looking to exploit lock-in effects and consumer inertia to increase the price. This strikes me as against consumer interests.

Additionally, it looks like another instance where producers are looking to expose consumers to risk and insulate themselves against it. It gives them leeway to offer loss-leading prices to people who join their network and then recoup any losses, or offset any increases in cost later on.

Please read: Mobile and broadband price rises to be investigated

What is OFCOM?

Ofcom is the acronym for the Office of Communications, which is the independent regulator for the UK communications industries, including television, radio, telecommunications, and wireless communications services. It was created in 2003 to replace several existing regulatory bodies and has been given the responsibility for ensuring that the UK communications industries are competitive, innovative, and provide consumers with high-quality services at fair prices.

Ofcom has a number of duties, including:

1. Regulating the content of television and radio broadcasts to ensure that they are legal, decent, and impartial.
2. Ensuring that telecoms operators provide a universal service and that everyone has access to the communications services they need.
3. Regulating the use of the radio spectrum to ensure that it is used effectively and efficiently.
4. Promoting competition in the communications industries and ensuring that consumers have a choice of suppliers.
5. Protecting the interests of consumers, including ensuring that they are provided with accurate information about the services they use and that their complaints are handled properly.