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Ofcom plan aims to let you cancel your phone contract early

New plans from Ofcom aim to let you duck out of your phone contract early if the price is raised.

New rules proposed by telecoms industry regulator Ofcom will hopefully allow you to duck out of your phone contract early if your network hoiks up the price, without you having to pay a penalty fee.

Currently, if you're on a fixed-term phone contract and your operator decides to ramp up its prices (as Orange, T-Mobile and O2 have done in the past year), you're only legally allowed to end your contract if the rise is of "material detriment".

Ofcom rightly thinks that's pretty vague -- what is detrimental to one person might not be too bad for another -- so is hoping to change the rules, so that any increase in price, however incremental, will allow you to end your contract. Better yet, you'll be able to terminate it without paying any kind of charge for early cancellation.

Ofcom's plan is open for consultation until 14 March. Phone networks have until then to voice their concerns -- and naturally, I imagine there'll be quite a few. An alternative proposition from Ofcom is that you'll be able to choose to sign up to variable-rate contracts if you so wish -- much in the same way you can have variable rates of interest on bank accounts.

As David Meyer at GigaOm points out though, this could result in a change in the way we buy phones. If the proposal goes through, networks will likely increase their prices to offset any need to raise them during contracts or indeed the lost money from a customer being allowed to cancel their contract early.

If phones such as the Galaxy S3 were then only available on contracts of £50 or more, buying the SIM-free version outright becomes a much more sensible option. If phones like the Nexus 4 start a precedent for high-end but affordable devices, the days of subsidised phones might become a thing of the past.

We'll have to wait until March to see what the results of Ofcom's consultation are. In the meantime, keep your eyes peeled for your next smart phone from CES in Las Vegas next week and Mobile World Congress in February.