BT Calls on UK Gov to Help Subsidise Social Broadband Tariffs

The CEO of BT’s Consumer ISP division, Marc Allera, has today called on the UK Government to help support the industry by making it easier for home broadband providers to launch new social tariffs via targetted funding or subsidies, which could come in a number of different forms.

Over the past few months’ a number of MPs have called on Ofcom to introduce a regulated social tariff (here), which could potentially require all broadband ISPs to offer a cut-price internet and phone service to those on benefits. The regulator itself has already indicated that they were considering the introduction of such a tariff and have similarly been busy encouraging providers to make a greater effort (here).

BT is currently one of only a handful of providers (other examples come from Virgin Media, Hyperoptic and KCOM) to offer a social tariff for such groups (BT Basic), although earlier this month they announced plans to launch a much more attractive fibre-based (FTTC / FTTP) replacement for that called BT Home Essentials. The new tariff will go live next month.

The new at-cost social tariff will give eligible customers a 36Mbps “fibre broadband” service and 700 minutes of included phone calls for just £15 per month (or £20 for 67Mbps). Some 4.6 million homes, specifically those where the bill payer is on Universal Credit and other means-tested benefits, could be eligible.

In a new blog BT’s Consumer CEO, Marc Allera, has called on “all fixed broadband operators” to implement a similar social tariff, costing no more than £200 per year. But he also wants the Government to do a lot more in support of that (i.e. as opposed to merely relying on the generosity of big commercial operators).

Marc Allera said:

“BT alone cannot make our society digitally inclusive, even as we continue to invest in our networks to keep up with unprecedented customer demand for data in this new world of connectivity. So, we are calling on all fixed broadband operators to implement a social tariff costing no more than £200 per year, which offers speeds of up to 10mb upload/40mb download where available, for customers on low incomes and Universal Credit.

We are offering BT Home Essentials at cost price to help those who might struggle to afford broadband and landline. At the same time, we know that for some families £15 per month is still a stretch. If, as a society, we want to do more to help those people, Government support will be crucial.

Funding or subsidies for social tariffs could make a very significant difference, in the same way that winter fuel payments help vulnerable people with their energy costs. Removing the VAT from bills for those on social tariffs could also be a big help to those who need it most.”

Naturally BT would benefit if more ISPs launched such tariffs because that enables the burden of supporting those groups to be shared, although it’s probably not realistic to expect every ISP to launch such a product. Broadband provision is a business of very low margins and such tariffs would thus be particularly difficult for smaller providers to deliver, without also putting their business at risk.

Meanwhile, the idea of encouraging the government to support such tariffs via complementary measures, such as removing VAT from bills, is one that is likely to resonate with a lot of people, while simultaneously also shifting some political responsibility back to those who may be seeking such tariffs.

At present there have been no solid indications that the Government might actually go down such a route, but certainly such ideas must form part of the debate. However, ISPs that offer such tariffs also need to work on doing a much better job of advertising their existence to consumers, which remains a weak point.