No Sign UK Gov Pushing for Mandatory Social Broadband Tariffs UPDATE

A short but interesting debate was held yesterday in the Lords Chamber, which appeared to indicate that the UK Government are not, at present, pressing Ofcom to introduce mandatory low cost social tariffs for broadband across the industry. But like the regulator, they would like to see better promotion of those that exist.

Social tariffs are lower cost and often cut-down, or slower speed, services that are generally offered to those on certain benefits (e.g. Universal Credit, Income Support etc.). Until recently, you could only get such products from broadband ISPs like BT and KCOM, which were fairly slow, restrictive and poorly promoted.

However, since last year, and largely due to the impact of COVID-19, there has been a growing push for Ofcom and the Government to encourage wider adoption of social broadband ISP tariffs (here and here). At one point Ofcom even warned that it would consider the introduction of a regulated social tariff if more change wasn’t forthcoming (here), while BT asked for public subsidies to support such services (here).

Since then BT (here), Virgin Media (here) and Hyperoptic (here) have all launched a new range of much more attractive social tariffs and the regulator is due to report on their latest thinking soon. Suffice to say that yesterday’s debate in the Lords Chamber is very timely and offered an opportunity to examine the Government’s current viewpoint.

The debate itself, which was raised by Lord Clement-Jones (Liberal Democrat), asked what assessment the Government, represented below by Baroness Barran (Conservative), had made on the impact of the pandemic on (1) access to, and (2) the affordability of, broadband internet services. Naturally, this covered the idea of a social tariff on several occasions.

At one point Lord Clement-Jones even asked the Government directly whether they would “commit to requiring all providers to offer an affordable social tariff for low-income families, as recommended by the Lords Covid-19 Select Committee?” The response was to support Ofcom’s call for stronger promotion of existing social tariffs in order to improve take-up.

Baroness Barran said:

“We also recognise the importance of affordable broadband. That is why we have worked with BT, Virgin Media and others to ensure that they offer social tariffs for households in receipt of universal credit and other means-tested benefits.

…

The Government are working in different areas to address affordability, and I am sure that the noble Lord has seen the recent Ofcom report on this issue. Some 99% of households can access an affordable tariff, but the take-up of that is much lower than we would hope, and Ofcom has recommended more proactive marketing of those tariffs.”

Baroness Barran later repeated her call for “the providers of those tariffs … to proactively market them” and said the government is “working and meeting with them regularly and encouraging them to do so.” The Baroness also said that Ofcom would be the one responsible for monitoring the effectiveness of such tariffs, not the government.

In short, at no point did the Government even hint that they were pushing for a regulated or industry-wide social broadband tariff, either as a free service or just a low-cost solution. This doesn’t mean to say that Ofcom won’t announce such a change in the future, but it would appear to make it less likely. For now, the approach seems to be one of promotion and voluntary, rather than regulated, change.

We shouldn’t forget that broadband and mobile provision tends to be a business with fairly low margins, which makes it difficult for commercial operators – particularly smaller players – to permanently gift super cheap packages (often at cost price) to lots of people without putting themselves at risk, or forcing price rises for other customers.

The question now will be whether what has been done so far is enough, or do ISPs need to go further still (e.g. Sky Broadband and TalkTalk, two of the other major ISPs, have yet to launch such a tariff). Providers with a social tariff would no doubt like more ISPs join them in order to help share the burden.

UPDATE 11:13am

We’ve learnt that ISPs are currently examining a formal proposal that could see a new Broadband Inclusive Wholesale Tariff being launched via Openreach (BT), which would be used to support end customers who are unable to afford adequate broadband connectivity (i.e. this is something that many more ISPs on the same network could offer).

The tariff is currently being discussed via the Office of the Telecommunications Adjudicator (OTA), although it’s too early to say whether this will end up being rejected or not. Much may depend upon whether Ofcom decides to push such a tariff on to the industry and the costs involved.