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UPDATE2 TalkTalk Call on Rival ISPs to BAN Capped Broadband Packages

Wednesday, August 19th, 2015 (8:35 am) - Score 1,433
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Budget ISP TalkTalk has used a new YouGov survey to claim that consumers who pick broadband packages with a capped usage allowance risk excess data charges, which could be worth £140m across the industry. The provider wants rivals to BAN such products in favour of “unlimited” services.

The survey itself, which sees TalkTalk incorrectly claim to be the “only provider to offer 100% totally unlimited broadband as standard“, was conducted online with 2,023 British adults between 10th and 11th August 2015. In fact there are a good number of ISPs that offer only unlimited services, such as Hyperoptic, PlusNet and Aquiss to name a few.

Today the once rare notion of “unlimited” usage is somewhat common place among fixed line home broadband providers, although many ISPs also continue to offer slightly cheaper capped packages alongside those. For example, Sky Broadband’s entry-level Sky Fibre (FTTC) service comes with a 25GB allowance and is about -£10 per month cheaper than their unlimited equivalent (excluding special offers) and BT has a similar selection.

But TalkTalk’s survey warns that 86% of capped broadband customers surveyed said no one in their household kept track of data usage and 25% who go over the limits say they aren’t offered a plan that matches their usage requirements. Furthermore 21% of those on capped packages claimed to feel worried by the prospect of going over the limit and said the “threat of charges spoilt the enjoyment of being online“.

The ISP then points to Ofcom’s data, which at the end of last year found that the average UK household used 58GB (GigaByte’s) of data each month. TalkTalk notes how this is “much more than the 10-40GB monthly limited offered on ‘attractive’ headline broadband packages by major providers“, which is normal when talking about an “average“.

Tristia Harrison, TalkTalk’s Consumer MD, said:

Our research shows that for almost half the population, internet connectivity is on a par with other essential utilities like water and electricity. As our dependence increases and more and more of our appliances and gadgets connect us to the things we love, the practice of capping broadband data usage is clearly outdated and unfair.

At TalkTalk, we are proud to be the only provider to offer 100% totally unlimited broadband as standard, with no download limits and we’d like to see other providers follow our lead by bringing an end to these unfair caps.”

Sadly the ISP doesn’t clarify precisely how many of the survey sample actually fell into the “capped” group, although their workings for reaching the £140m figure estimate that 4,393,726 UK Internet using adults have incurred an extra charge for exceeding a monthly allowance.

The aforementioned population figure is then multiplied by the average charge per customer per year (£31.87), although this figure isn’t explained. Earlier in the report TalkTalk also claims that, when incurring charges, capped broadband customers pay on average £11.30 a month (this also needs better explanation).

Certainly TalkTalk are right to reflect the risk of excess data charges on capped packages and the fact that some related consumers aren’t keeping track of their usage, which could end up hitting them in the pocket further down the road. But does this mean that all capped packages should be banned? It might not be that simple.

Consumers usually pick a capped package because it’s cheaper and they won’t be anticipating a significant level of Internet usage, which meets the needs of light users and is thus a useful choice to have.

Capped packages are also easier for the ISP to manage and may thus result in less variable performance for the end-user. By comparison unlimited packages are more expensive to cater for and performance can be more variable, particularly during peak periods, although experiences do vary.

On top of all that the £140m claim is somewhat pie in the sky without a wider base of comparison. In our experience ISPs can use all sorts of different methods for approaching excess data usage, such as those that will merely slow your connection and others who warn you before recommending a package upgrade if the excess usage continues for several months.

Excess data charges themselves are also highly variable, with some providers pricing each extra GigaByte used at a few pence and others charging several pounds. So perhaps ISPs just need to become better at communicating data usage to customers and offering upgrades to those who need it, which might be preferable to reducing the number of choices down to an unlimited-only mould.

UPDATE 10:59am

Added a comment from Entanet below.

Paul Heritage-Redpath, Entanet’s Product Manager, told ISPreview.co.uk:

Capped packages still have an important place within the market and we have many customers that still prefer to opt for a capped package over an unlimited option. Surely, we should be providing consumers with a range of suitable options rather than only providing unlimited – after all, not everyone needs or wants unlimited.

That said, it’s also important that providers assist their customers to effectively manage and monitor their usage to ensure they minimise the risk of high overusage charges. For example our customers can view real time stats on usage via our customer portals and they receive usage warning emails as they approach and reach their limits.

They also have a choice of oveusage options to further aid spending control – choosing from pre-pay top-ups which roll over month to month or they can choose to pay on a per 1GB basis and set an upper limit. We think the key to this is choice and responsible communication and useful management tools from the providers.”

UPDATE 1:26pm

The boss of Andrews & Arnold (AAISP) has also chimed in with some additional perspective.

Adrian Kennard, MD of AAISP, said:

It is interesting that TT say “internet connectivity is on a par with other essential utilities like water and electricity” as they are normally metered services and not “unlimited”. It is really disappointing that TT Retail are trying to shame ISPs like us when charging us for TT wholesale backhaul at the rate they do.

In a competitive market, the ISP offering cheap unlimited usage will attract the 2% of customers wanting to use the service flat out. Until backhaul costs come down, a truly unlimited usage package at a low price cannot be viable.

Talk Talk are in a position to reduce that backhaul cost for ISPs like us, and allow us to offer cheaper services without the same usage limits or costs – will they put their money where their mouth is?

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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19 Responses
  1. Maislyn Monaghan

    I agree with TalkTalk in this case, as every time I see the sky advert for *free fibre broadband or the BT one it just makes me cringe as they speak nothing about the pitiful allowances they have except in text at bottom of the screen. Considering the likely vast speed increase a customer experiences e.g. ADSL to VDSL2, they could easily go through their allowance in a day. I’ve been known to exceed a TB but usually hover around 500GB a month so clearly I’m a heavy user but I just don’t see how the average household is 58GB, I would have thought at least double especially with services such as Netflix.

    • Fair point, although that’s perhaps more an issue of how such packages are advertised by certain ISPs than a reason against the existence of capped options themselves. Other ISPs do a lot better on this front.

    • Kev

      To be fair though, they do do unlimited fibre as well – my parents would never use the 25GB cap on sky’s standard fibre service, so it would suit them. I can’t get fibre, otherwise I’d be quite happy to pay for their unlimited fibre as I’ve said further down, I can’t fault their ADSL unlimited broadband – touch wood!

  2. FibreFred

    Do they want to ban mobile usage allowances as well?

    Here’s a thought MoanMoan why don’t you offer a product as you see fit and let your rivals offer what they want , if yours is better you win more custom. In fact as the only 100% unlimited provider (ahem) you have a usp

    • dragoneast

      I chose my ISP carefully, after thought. It’s a capped product, with excellent QoS mostly, and more expemstive than TT. I manage the use of my connection and I’m happy, thank you. And I’ll ask TT (and anyone else so inclined) not to try and dictate to me what I should and shouldn’t have. Would that they put as much effort into their own business. Not a chance, it’s too much effort, and doesn’t generate the attention they seek.

    • dragoneast

      ooh, typo alert: “expensive”, not what I typed!!

  3. DTMark

    Dear Talk Talk,

    Should this socialism also extend to calls made on mobile services – only *unlimited* all-inclusive packages should be permitted too?

  4. Hull_lad

    So they think that it is feasible to continue to offer cheap, unlimited services when every household is using terabytes of data each month?

    It’s inevitable that a price/usage relationship will be re-established. It’s already happening in the U.S. The likes of Sky are willing and able to absorb decreasing margins on broadband as their core revenues are driven from content, but ISPs can not feasibly continue to offer unlimited services at a fixed price, in the same way that electricity and gas companies can’t.

    • DTMark

      It can be done. It’s like socialism, where everyone is forced to chip in a few quid so that a small few can take more out than they put in.

      Thing is that “few quid” is going to rise.

  5. Graeme

    How about talktalk focus on making speeds good for customers during peak times

    • cyclope

      Stalk talk aren’t alone in that BT Wholesale craphaul is as bad for many at peak times they oversell too, pile em high and sell em cheap mentality , but BT claw their losses back by ripping everyone off with their extortionate prices on line rental

  6. sentup.custard

    It’s as bad as the jam doughnut situation – why the hell should I have to pay per doughnut instead of paying a 50p monthly charge for as many as I like.
    Then there’s pensions – my Standard Life pension shouldn’t be capped, how on earth am I supposed to buy half a dozen country cottages and a private beach?
    And don’t get me started on rail travel! It’s scandalous that I’m having to fork out the enormous sum of £18.50 to London Midland (and that’s off-peak with a railcard!) to go and see my sister in Staffordshire – it’s only £10.25 to Tring, why should I pay over 50% more just because I’m going to Tipton?
    😉

  7. tonyp

    I just did a little bit of maths on my ADSL line. If I were to have a continuous download for 24 hours, average speed 3.6Mbit/Sec (I should be so lucky!) that would equate to 38880000000 Bytes. Not sure what that says but it is unlikely for me or my house to consume that much data. In a month. I am not a Spotify, Netflix or other streaming media fan as I prefer buying the source material. Call me old fashioned….. (“YOUR OLD FASHIONED and …. !”)

    BTW I also hang off Tring’s exchange but with no chance for the foreseeable future of anything better than the above speed since I am 3.9Km from the exchange cab.

  8. dave

    silly talktalk. there are many pensioners who only use the internet for email/online banking, a 10-40gb cap is more than enough for that. Talktalk would rather their broadband price be increased, scumbags.

    • sentup.custard

      Indeed, Dave.
      Being serious for a change, my allowance is 25GB. Despite being fairly active on the internet and having a website which has a biggish (by my standards) database upload once a week, I don’t come anywhere near my limit, it’s unusual to even hit 20GB.
      That’s probably because I don’t treat my computer as an entertainment centre – I have no interest whatsoever in online music or video etc., nor gaming, and just visiting “normal” websites for information, discussion, plus downloading straightforward images from various online archives and such like, doesn’t use much data.

    • DTMark

      We only use about 30GB per month despite multiple connected devices, some HD TV streaming and me working from home.

      I suspect the key factor is that we have little interest in American TV shows, we largely only watch the BBC, and we have a Humax recorder box so rarely use the iPlayer.

      If I had unlimited usage, I’d be inclined to ditch the Humax PVR box and use iPlayer much more and the data usage would soar astronomically.

    • FibreFred

      Missing out on some quality stuff there DTMark, we still enjoy British TV but by far I watch US shows more than British, there’s some epic viewing.

  9. Kev

    I remember a few years back when Sky started their Sky Broadband Unlimited package and people stated their network would go into meltdown. The only thing that happened, was that their subscriber base grew eally quickly. They’ve had to act n certain areas as a result of this, however they were the driving force out of the big ISP’s and Talk Talk & BT had to follow them.

    I’ve never had a problem (let’s hope it stays that way) with Sky Broadband’s unlimited service and get consistent throughput at any time of the day. Long may it continue 🙂

  10. Darren

    Are TT daft in the head! Mind your own, less choice is a bad thing.

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