UK Councils Seek Cheap 10Mbps Broadband Tariff for Low Income Users

The Local Government Association, which supports councils from all over England and Wales, has called for the proposed 10Mbps broadband Universal Service Obligation (USO) to include a subsidised “social tariff” so that those who are unemployed or on low incomes can get an affordable service.

The importance of affordability was also reflected in the Government’s March 2016 USO consultation (here), which noted: “The rationale of a USO is to act as a ‘safety net’ where market forces alone do not deliver affordable access to basic services for people, particularly those in remote areas or those with low incomes or disabilities. USOs aim to ensure that a minimum set of communications services are available to everyone at a fixed location, upon reasonable request, and at an affordable price, irrespective of where they live, in order to prevent social exclusion.”

One of the key strands of the existing legally-binding USO is the requirement on BT and KCOM (Hull) to ensure that all customers can afford to obtain and retain a telephone service, which must be able to support “functional internet access” (i.e. slow dialup speeds). This includes provisions for those who might otherwise struggle to afford such a service.

On BT this tariff is called BT Basic, which costs just £15.30 every 3 months for line rental and that comes with a quarterly call allowance (users get up to 60 mins of free weekend calls to 0845 and 0870 numbers). This can optionally be taken with a special 10GB capped ADSL broadband service and, with BT Basic line rental included, the total cost is £29.85 every 3 months.

Under the existing USO suppliers are not forced to offer the cut price broadband option. However the LGA wants to see this measure being extended from line rental and made to apply to the 10Mbps broadband service so that people, on any USO approved supplier, can take a “subsidised broadband service should they face undue hardship in paying a market rate.”

Mark Hawthorne, Chairman of the LGA’s People and Places Board, said:

“Good digital connectivity is a vital element of everyday life for residents and can help them cut household bills, shop online for cheaper goods, stay in touch with distant relatives, access their bank accounts and even run their own businesses.

As central and local government services become more digital, the USO will need to provide faster and more reliable speeds and, for our most vulnerable residents, a subsided connection at an affordable price.

The quality of digital connectivity can be markedly different from area to area with some households being able to access superfast broadband speeds whilst others can only achieve substantially less. Councils want to see a social tariff enabling all people to be able to access a subsidised broadband service.”

Some form of subsidised connection looks highly likely, although it’s worth pointing out that the broadband side of Internet connectivity is already a very low margins business where making a profit can be hard. The move to adopt all-inclusive-pricing (broadband and line rental combined) may also create an additional complication when setting such tariffs, although it also makes it easier to communicate to consumers via simplified prices.

As usual there’s bound to be plenty of complexity around this point, such as the question how big the usage allowance must be and whether or not Traffic Management measures should be applied in any way, shape or form. Social tariffs are generally only designed to support basic needs, rather than deliver everything you could want.

No doubt others would perhaps argue that there are already plenty of cheap broadband options around and as such the social tariff should remain tied to the line rental side, but that rather assumes that the only way a USO can be delivered is via fixed lines. The Government are currently considering all of the options, such as satellite, fixed wireless access, Mobile Broadband (3G / 4G) and pure fibre optic ISPs, almost none of which come attached to a traditional copper line.