Openreach Unlikely to Launch Social Broadband Tariff for UK ISPs
A growing number of ISPs have introduced cheaper Social Tariffs over the past year – aimed at those on benefits who are most exposed to the UK’s cost-of-living crisis. As part of this, some providers have called on Openreach to launch social tariff products at wholesale to support them, but there’s so far no indication of that happening.
True Social Tariffs are only available to those in receipt of certain state benefits (e.g. Universal Credit), which can vary between ISPs. Prices for these tend to start at around £15 a month (inc. installation and a router) and they typically offer speeds of 15-50Mbps or better. Broadly speaking, these are basic broadband (or mobile) packages that are offered at around cost price or even below cost, which means no profit margin for the provider.
At present the low take-up of such tariffs means that they aren’t a huge drag on an ISPs bottom line, although that could change as adoption rises. Even BT – an operator that attracts the lion’s share of social tariff users – has warned that they may eventually become “unsustainable” without more support (here).
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Last year Ofcom estimated that, out of 4.2 million households in receipt of Universal Credit, some 136,000 had taken a social tariff (3% of those eligible), which is up from 55,000 six months earlier. Suffice to say, the regulator’s next update may well double that figure again.
Naturally, one possible way to both support such tariffs and encourage more ISPs to launch related products – a key demand of both Ofcom and the government – would be for network access providers, particularly Openreach, to launch Social Tariff products at wholesale. This might both help to make such tariffs cheaper and also help to share some of the burden that ISPs face in offering them.
A number of broadband ISPs have recently told us that they’ve been calling on Openreach, both formally and informally, to do exactly this. Similarly, Sky Broadband last week informed us that they had committed to pass on any wholesale savings from Openreach, should they introduce a social tariff wholesale price.
However, the current likelihood of this actually happening remains low and, after speaking with several ISPs, we understand that their calls have thus far been rebuffed. Openreach has similarly indicated to ISPreview.co.uk that their position is unlikely to change. So for now at least, short of a major intervention, it seems as if providers should not be expecting a big change in approach.
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A spokesperson for Openreach told ISPreview.co.uk:
“Openreach is heavily regulated and our prices came down for more than a decade as demand for broadband and data exploded.
This year Ofcom allowed us to link some prices to inflation for the first time, giving us “headroom to invest “ in faster, more reliable Full Fibre for the UK. That’s something the whole industry agreed needs to happen and we’re doing just that with more than £15billion investment in new digital infrastructure.
In April 2022, we increased prices for the first time by less than CPI (<4%) and we’ll do so again in April (7.7%). This includes significant discounts on our Full Fibre products, which ISPs want, to encourage people onto our fastest, most reliable services.
As a wholesaler, we’re just one part of the value chain, but we do understand that our prices impact consumers, so we’ve listened to and consulted our wholesale customers at length on our pricing plans. Inflation in energy, equipment and labour costs are affecting us too, but we want to continue investing to make sure the whole of the UK benefits from Full Fibre broadband.”
The operator also highlighted that they have introduced some help via their earlier Connect the Unconnected offering, which essentially waived the connection fees for new low-income customer households on Universal Credit – saving them up to £92. But this is due to end on 31st March 2023 (unless extended again) and the lack of a long-term approach doesn’t help the future sustainability challenge. Not to mention its other restrictions (i.e. it’s only available to new connections, those taking UC and on FTTC lines).
For its part, the Government could conceivably also help by offering to part-subsidise such tariffs from public funding. But, given the state of the economy right now, they seem much more likely to continue passing the buck by putting pressure on the private sector to sort out all the country’s many socioeconomic problems for them.
Finally, a quick reminder – we know social tariffs can be a divisive topic for some, but that is not an excuse to abuse the comment system in order to post offensive remarks toward those who take state benefits. Such posts are against our rules and will be removed.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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The govt should just cut taxes, not “subsidize” internet
I agree, they should cut taxes
I disagree the gov should increase taxes on those in the top earning brackets to 60%+ if their earnings are within this country and increase the UC people get paid so they’re closer or on level to those earning minimum wage. Why should the disadvantaged live as lower class citizens than those on minimum wage and the rich get richer while the poor get poorer.
@Kektopia
That Universal Basic Income trial in Wales comes to mind. I believe the pilot ends this June.
Really, Universal Credit needs a complete overhaul; even its creator, Iain Duncan-Smith, agreed with keeping the pandemic rise permanent.
Why settle at 60% and not at 99% in your lalaland communist utopia? Why even work at that point?
You leftists don’t understand the reason why we are in a recession is because taxes have drained productivity
Is that why our neighbours, who all have higher taxes, aren’t in recession?
Dear Openreach – I don’t care! I am using 5G with download speed of 460Mbps with £12 a month unlimited data from smarty social tariff.
I don’t want your service Openreach. Biggest rip off in UK with pure greedy. Why VDSL2 74Mbps at £24 a month, why G.fast 145Mbps at £47 per month or G.fast 330Mbps at £67 per month. Smarty 5G can do 460Mbps at £12 a month.
Hello Max
Those maybe ISP prices but they are not Openreach prices
Three has the best 5G speeds in the country, but it does not have the coverage that EE does. Neither are particularly great during peak times. What I have noticed is that they tend to throttle you to ridiculously slow speeds if you are doing Windows updates because of their useless prioritisation so those updates end up never getting downloaded.
That said, BT is known for horrendous prices, so I would not go with them either.
If you’re home working or rely on broadband speeds being reliable to reasonable degree, then you cannot really use mobile broadband.
Examples… Some large scale event comes to your area, the local mast goes down, many other examples of when mobile broadband cannot take the place of traditional fixed broadband.
But some people are happy as long as they can do a speed test and it wizzes to 800mbps and don’t care about reliability for some reason 😐
welcome to the socialist republic of cuckoo oak
I agree Pepstar
A van took out the BT cabs last night as it was some drunard trying to do a right corner at 60mph whilst running away from the Rozzers
Everyone is out – apart from me as I am on a leased line (although my backup line is FTTC so is down as well( None of my neighbours want to pay me to access my line but they are all whinging that it’ll take BT about a week or more to start to get things working. One guy says he is losing money – but refuses to pay to get back online for now.
People are idiots.
Also a lot of MSO’s going on daily – seeing some eery day this month so far
@Pepstar, Some people have little choice, I helped a household last year change to mobile broadband as it was the best choice for them, they used Dial up before as it was better than the ADSL that was available where they lived. Only last year they got a decent mobile signal, so we went for 4G and it works fine.
Fixed line broadband can be knocked out by lots of ways, a cabinet I pass on the way to work have been knocked so many times over the last few years by cars going straight on and mounting the pavement, I wonder how many times that have gone off-line due to that. Openreach don’t use cabinets for fibre, but Alt nets do.
Found a way to escape your G.fast contract, again, then.
I could have had a Social Tariff, I claimed for UC last year and to my shock and horror I got it, only £15 a month, but still shocked. I am having a pay rise next month, so I doubt I will get anything once that comes in. If our over paid MPs can claim for things, then I don’t feel bad about claiming UC or getting the payments made to help with energy use.
Anyway, I am not going to claim for Social Tariffs. I can go onto a cheaper broadband service if I am that worried, Now is £22 for a 36Mb/s connection,
You should not feel bad. It is there to be used by qualifying claimants.
Nobody needs more than 36mbps, right?
BT has a 76Mbps social tariff for £5 extra
@Dylan, thanks, but I don’t feel bad, I know it is there to be used, the problem is the limited providers that offers it, I am with plusnet and they don’t offer it. I don’t really want to change to BT, I know GBT own Plusnet, but plusnet is run differently and have a slightly better customer service.
@Sam P, I don’t know where you get this idea that nobody needs more than 36Mb/s, some people may need more, but if they do then they have to pay more if they can get it. Social tariff keeps people online at a speed that for most people is fine. i have 36Mb/s and I can stream video, listen to music, download files, ok large files take a while to download, but they will download. If you have a large family then yes faster broadband is better, but if you are paying less than other people then you don’t expect the fastest speed.
I don’t know if you are having a pop at me because I say I don’t require more than 36Mb/s and see little point in me changing to Fibre, but that is my choice.
Now is £22 for up to 76mbps (average speed) – both tiers are same price.
Social tariffs are a sticking plaster to the issues of communication providers being able to hike prices in-contract, inflation running very high, and social security not covering people’s living costs. Attempting to have infrastructure builders pick up those costs and adding another layer of admin in the process is the wrong approach, especially when government are trying to encourage “the market” to build FTTP rather than public subsidy.
Have to agree with all of that Jonny. And it’s not just telecoms – energy providers have been running complicated “supplier obligation schemes” for many years now, water companies have their own social tariff setups. Yet these are merely foisting the costs of supporting a random and unfair welfare system onto companies, who then add those costs to the bills of those who can pay (and adding VAT to that element as well). And in the meanwhile taxes and government spending are higher than they have been for many decades, and the government plead poverty when it comes to (eg) public sector pay, yet have billions to squander on all manner of misbegotten schemes. Here’s a thought for you – the annual cost to the public of running the V&A Museum each year is about £60 per (free) visitor. Worthy cause? Probably. Worth more than other possible uses of that sort of money? You tell me. If the V&A are on your “must fund” list, insert foreign aid, HS2, tax avoidance by multinationals, foreign aid, defence procurement, Ofcom’s running costs, the costs of running the Westminster Gin Palace, the vast but invisible costs of renewables added to your energy bill etc as per your political leanings, or any of the other profligacies of government.
It sure would be nice to just have fixed prices for the duration of the contract. Hiking prices every April negates any sale that originally persuaded you to sign up in the first place.
Ever heard of AAISP? They have in the past EDUCED the cost – and everyone pays the same from start to finish. £55 a month for 10TB seems to be the actual true cost – but people want to pay less and get more. But then whinge when that subset means costs rise for the ISP
If an illegal migrant can show up on our shores in a Dinghy from France. And get Free Hotel stays in a four star hotel, free food, free spending money and free internet. Then the rest of the UK should at the very least be able to get discounted internet. Furthermore, if we didn’t waste 10 billion per year on the above lot the whole of the UK could get free internet regardless.
Sorry 2 things..
1. I met someone today who was an illegal from japan – She was in a halfway house and was given £10 a week for food – Yes you read that right.. so it’s not as you have been lead to believe (and I saw all her paperwork and it’s right)
2. 10 Billion!? try 23.6.. We could wipe the countries debt clean if we put 1.5 years of the Immigration money to good use. And we’d have money left!
The UK owes over £2.4 trillion.
The money being spent on refugees is coming out of the foreign aid budget. Cutting it entirely wouldn’t even cover a couple of months of the UK’s deficit let alone the national debt.
The issues with boats across the Channel right now are mostly due to Brexit. Before it we would have just sent them straight back to France, and after if it weren’t for the cretins so obsessed with ‘sovrinty’ they think any kind of deal with Europe is a betrayal of what they voted for they could be processed in France and again sent back there immediately.
Nothing to do with Brexit. Doesn’t matter whether you are leave or not.
There was an existing treaty/agreement with France over this that was independent of Brexit.
That treaty, the Treaty of Le Touquet, allows for UK immigration officers to be in France and the reverse so that people can clear British/French immigration one after another at their port of exit.
The ability to return irregular entrants to France without considering their claims ended with Brexit as the UK left the Dublin Protocol when the transition period ended.
https://commonslibrary.parliament.uk/research-briefings/cbp-9031/
I’m not sure how much clearer that can be.
If the UK weren’t run by cynical morons who actually want irregular entrants so that they can use irregular entry as a political tool, they’ve sod all else but fear and nationalism so I see their point, alongside appeasing cretins who think any agreement with the EU is a betrayal as Leave Means Leave we could resolve this fairly rapidly, but ‘sovrinty’.
There is a much cheaper fix available (on the premise that there is at least one ISP that can offer a social tariff to each address, maybe mobile)
Ofcom to regulate that
* Biggest ISP must offer a social tariff (e.g. BT/EE, Sky, TT, Virgin etc.), on the basis that they can “wear” the costs. This should get a high % of national coverage
* Smaller ISP must allow exit of contract prior to term without penalty to anyone on qualifying benefits, if they choose to not offer a social tariff. (No need to exit “to” a social tariff, just proof that your circumstances have changed i.e. you have gone onto benefits or were on benefits). Customer can then choose fixed line social tariff or a less reliable but more PAYG mobile solution (maybe with a way to have a subsidised 4G/5G router, discounted up front or “rented” for a couple of years by benefit clawback with free replacements if broken/lost/stolen)
* Any ISP offering social gets some assistance to cover costs, (capped payout thus favouring smaller ISP/Alt nets offering social to keep everyone competitive)
The more heavyhanded approach would be to have a social tariff “pool”, and all the suppliers are subsidised to pick up a share of the “pool” in proportion to their market share (again perhaps with a cap). If more than one provider is available, customer can ask to switch if the original assignment doesn’t work out (e.g. to an alt net)
I’m not sure why the ISP’s are asking Openreach, a wholesale infrastructure provider, to supply Social tariffs for ISP’s. Does this mean that some of the ISP’s are on benefits or claiming universal credit? Obviously they don’t, so why should Openreach subsidise ISSP’s who choose to offer a social tariff?
I don’t think social tariffs are the answer, as someone else has said they are a sticking plaster to an overall issue. We in the UK have a highly competitive marketplace for telecoms in all aspects and where there is a subsidised tariff the cost is picked up by those who pay full rate. You can get 40Mb tariff from a lot of providers looking properly for around £20 a month, its not an extortionate amount to pay even those on benefits. I think OR makes a legit point about investment and that cheap pricing even if targetted can harm that in the longterm, especially with social tariffs. I accept HBB is a utility these days and should be treated as so in line with Energy and Water, but neither of the latter have social tariffs and everyone to a degree pays similar rates.
If we are to invest in infrastructure properly then we have to accept pricing to reflect that even at the bottom end.
Should the alleged 4.2m UC claimants be true and all of them went on a social tariff then we would all be picking up the cost of that, be it through taxation or higher bills. The cost of living crisis is not just affecting those on benefits and pensions but those working also…..some of us have not seen a pay rise in 3 years and yet have to make do with the same or less for more.
£20 a month is not an unreasonable amount to pay, if providers can afford to make it cheap let them do it, but not at the expense of the rest of us having to pick up the bill when we have an equally tight financial situation.
It doesn’t work like that.
If there are no social tariffs for those on welfare then they will have to “live within their means” by cancelling their PSTN/ADSL/VDSL/FTTP service. Zero pounds a month! The network and equipment will still be there and powered up, with less customers using it, which means they’ll crank up the prices for everyone else anyway! At least with social tariffs they will retain customers who will be paying some money towards the network instead of none at all!