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Ofcom UK Opt Not to Propose Regulated Social Broadband Tariff… Yet

Thursday, July 22nd, 2021 (9:36 am) - Score 984
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Ofcom has today revealed the conclusion of their latest bout of research into the impact of affordability and debt on broadband ISP customers, which found that around 2 million UK households “struggle to afford internet access.” But they aren’t going to force a regulated social tariff onto the industry.. yet.

Generally speaking, broadband and mobile services in the UK are often considered to be quite reasonably priced, when compared with the rest of the world, or even other utility services, but there will always be those – often in the most disadvantaged groups (i.e. low income, unemployed etc.) – who struggle with paying their bills. The impact of COVID-19 on society has only added to such pressures.

At the end of last year Ofcom said mobile and broadband providers could still do more to help tackle this and support their customers (here). In particular, the regulator called on them to pro-actively promote relevant low-cost social tariffs (where available) to customers who might be eligible (i.e. until now, take-up of such tariffs has been low) and demanded that more providers launch similar plans.

On top of that, the regulator announced that they would carry out further studies and warned of further action if providers failed to put more effort into tackling the issue. One option, warned Ofcom at the time, could include working with the Government to determine whether an industry-wide regulated social tariff is necessary. Various consumer groups (here) and MPs have backed that idea (here).

BT has since moved to replace their existing ‘Basic’ social tariff with a much improved Home Essentials package (here), while Hyperoptic has also joined the fun with their Fair Fibre Plan (here). Not to mention the similar Essential Broadband plan from Virgin Media and KCOM’s related Flex tariff.

Social-Broadband-Tariffs

However, forcing the introduction of a social tariff on all providers is a much bigger ask. Broadband and mobile provision tends to be a commercial business with fairly low margins, which makes it difficult for such providers – particularly smaller players – to permanently gift super cheap (loss making) packages to lots of people without putting themselves at risk, or forcing price rises elsewhere.

Ofcom’s Conclusion

After mulling all of this over, while also taking account of recent improvements (particularly the new tariffs from BT, Virgin Media and Hyperoptic), the regulator has not yet chosen to recommend that a regulated social tariff should be introduced industry-wide. But they do note that only around 40,000 households have actually signed up to one of the tariffs (i.e. 0.15% of all UK homes or only 1% of those in receipt of out-of-work benefits). We also get some other useful statistics.

Ofcom’s Statistics

➤ Average ‘new customer’ prices for superfast broadband and landline bundles last year were nearly 20% cheaper in real terms than in 2015, while the average amount of broadband data households used increased by 342% over that time, and average download speeds rose by 178%.

➤ The average cost of mobile services in 2020, based on average use across all mobile users, was over 20% cheaper in real terms than in 2015, while people used 369% more data.

➤ Some 2% of broadband customers and 3% of mobile customers are in arrears, while 0.1% of broadband customers and 0.2% of mobile customers are disconnected by their provider every month. Between January 2020 and January 2021, total debt among broadband and mobile customers increased from £475m to £550m.

In short, despite all the changes, Ofcom states that many ISPs still do not offer social tariffs and “providers of the ones that are available need to improve how they promote them as take-up is low.” However, the regulator has warned that if the industry “does not take sufficient action to address our concerns,” then they believe there would be a “strong case for exploring … mandatory social tariffs.”

On top of that, they found “considerable variation” in how different companies treat customers who may be in debt or struggling to pay their bills, which cause some people to receive less support than others, depending on who their provider is. In response, Ofcom have launched a new Call for Inputs to examine whether the protections in place for customers in debt or struggling to pay should be strengthened (open for feedback until 30th September 2021).

Lindsey Fussell, Ofcom’s Networks and Comms Group Director, said:

“Many of us take being able to get online and use a mobile phone for granted, but if you’re on a low income or have fallen on hard times, being able to pay for these vital services can be really tough.

We’re concerned that many households on the lowest incomes are struggling to stay on top of their bills and providers need to take action to make sure these customers get the help they need.”

Matt Upton, Director of Policy at Citizens Advice, said:

“Broadband is essential for the way we live today. People struggling to afford it shouldn’t be penalised simply because their provider isn’t one of the few firms offering a cheaper tariff.

The pandemic exacerbated this problem, but in reality it had already been dragging on for far too long.

The fact that so many providers still aren’t taking responsibility for protecting lower income customers shows just how precarious it can be to rely on voluntary arrangements and goodwill. Ofcom are right to say things aren’t happening quick enough. If we don’t see action soon, the government needs to get involved.”

Naturally, it would be for the UK Government to determine whether a formal review of social tariffs should be carried out. On this point the Government were recently asked, very directly (here), whether they intended to do so and the response seemed to suggest that they prefer the route of encouragement rather than enforcement. But that may change if the regulator adopts a different stance further down the line.

Much may thus depend upon the response from other large providers that have yet launched such packages, such as Sky Broadband, TalkTalk, EE and Three UK, and how those with existing social tariffs go about the awkward business of promoting them (it goes without saying that commercial providers don’t particularly like promoting the sale of loss-leaders).

Equally, it’s probably unrealistic to expect a sudden surge in the take-up of such tariffs, as in many cases this would require a change of ISP (consumers remain very cautious about such things) and lots of customers won’t be able to move until their existing contracts expire. Building awareness is also something that will take time, so politicians and Ofcom may need to be patient.

UPDATE 11:10am

The first comment from an ISP has arrived via BT.

A BT Spokesperson said:

“Since launching our Home Essentials packages at the end of June we’ve been pleased with how strong take up has been. However, we want to encourage more customers who need our help to get in touch.

We know from recent research that 54% of people are uncomfortable sharing their problems due to embarrassment and fear particularly when it comes to their finances, and we want to help break down those barriers of asking for help with Here For You – a campaign to raise awareness of the all the support we provide customers who need more help – and we encourage similar approaches across the industry.

Fast, reliable connectivity has never been as important as it is today, with millions of people relying upon our networks to get back on their feet after the pandemic – so we launched BT Home Essentials our low-cost fibre package that will now include all customers on Universal Credit, to provide a potential 4.6 million families across the UK with half-price fibre broadband and calls.”

The new campaign includes information and videos about the latest accessibility options and priority services for customers with long-term illnesses or disabilities, advice for dealing with scams and the newly launched Home Essentials social tariff.

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By Mark Jackson
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 Twitter, , Facebook and Linkedin.
Leave a Comment
20 Responses
  1. Damien says:

    I am grateful to BT for their home essentials – They also gave me a sim card for another £10 which means I am paying the same as I was paying the previous provider but getting so much more. I am moving to a place with faster BT and they said I could have it but keep the same price. I also got a job but they said I didn’t need to tell them about it so I am going to have 500mb for £20 a month for 11 months – which I am grateful for and I will stay with BT well beyond this and pay the full price when it’s up

    1. Mike says:

      You should be grateful to the other customers who are paying for it.

    2. Damien says:

      Are they? Are they really? Don’t be daft.

      [admin note: part of this comment was removed because it contained personal abuse]

    3. André says:

      Well, Damien…. The previous comment may have been crass but if you could please elaborate on your reply.
      It seems to me that a loss-making service needs to be paid for from somewhere else.
      If you don’t think that that is the case then I am genuinely curious to know how you believe the funding happens.

      PS: I am glad you’re feeling supported by BT, that’s ultimately the best result for you anyway 🙂

    4. Mark Jackson says:

      @Damien. Please avoid posting personal abuse toward others, it isn’t necessary when making a point and isn’t allowed by the rules.

    5. 125us says:

      @Mike – The same is also true for all rural telephone and broadband customers who are subsidised by city dwellers. Universal coverage requires a degree of cost and risk socialisation.

    6. Damien says:

      @Mark then please remove the comment by Disgrace as I find that offence more!

      But I bet you won’t..

    7. Damien says:

      @André

      Looking at their latest books – I don’t think my £20 a month will have any way shape or form dent on BT’s profits – their share holders just got 4M each I am sure they are not bothered either!

  2. Buggerlugz says:

    Damien, BT isn’t doing you any favours for 500mb at £20 a month. You could get an unlimited deal easily at that price point.

    1. Damien says:

      Sorry I meant 500Mbps for £20 a month I’e 1/2 a GB

  3. Disgrace says:

    Don’t feel like working? Here’s all the free stuff you can get:

    Free boiler
    Free double glazing
    Free insulation
    Reduced mobile phone tariffs
    Reduced broadband tariffs

    I work 50+ hours a week, and I literally need a new boiler but I don’t happen to have a spare £3,500 for one at the moment, when winter comes I’m in trouble. But if I didn’t work at all then I could have a free one? This is wrong. I don’t want my taxes being given to people who just don’t feel like working. OK if they’re genuine like disabled or something then fine .. but most benefit recipients just can’t be bothered because if you earn under 30k in the UK it’s better to just let the state pay for everything.

    1. Damien says:

      I work 68 – work harder then

    2. Damien says:

      Never mind not having the money for a boiler – you also don’t seem to have any clue what you are spouting about. I have been unemployed for 3 years. I never got one free. I had to take a loan to get a boiler which cost me £2350 from heatable.co.uk. A loan I have to now pay back out of my wages- just like someone else I’ve never had free insultation OR free windows. You can only get that if you OWN a house AND you are willing to have a charge on it.. Anyone who thinks the unemployed get this living in rented is so wrong they really need to use the internet for more than venting. I pay £10 for mobile just like any other BT customer would – go look at the site if you disbelieve me. I also over payed Virgin Media for 6 years and rarely used it – does this mean I paid for others who use theirs more? Like Mike says above? not at all.. I am disabled. I’ve also always paid council tax and NI even when unemployed!. So again, what’s the beef?

      [admin note: part of this comment was removed because it contained personal abuse]

    3. André says:

      @Disgrace
      As Wikipedia often says: “citation needed”.
      What you quote may or may not be true and may or may not be available to people who can’t work for whatever reason.
      You may want to discuss the merits and caveats of a system which is designed to support those who are struggling but your very first sentence suggests that your view may be grossly oversimplified and possibly not grounded in fact.

    4. 125us says:

      Most benefit recipients are in work. Blame employers, not the low paid.

    5. 125us says:

      Pretty shameful to be jealous of those worse off than you. If being unemployed is so advantageous, why not quit your job?

    6. Damien says:

      @125US well said.

      No one is forcing him to work – if he feels so aggrieved he should join us and then he will realise you can’t get all the freebies he mentioned!

    7. Tim says:

      I suspect the aptly named ‘Disgrace’ is a Daily Mail bot.

    8. Buggerlugz says:

      Hell, come across the channel on an inflatable, they’ll put you up in a hotel for 2 years at the tax payers expense, then literally give you an entire house for you so you can ship over the rest of your family from anywhere in the world.

    9. 125us says:

      That’s a flat out lie Lugz. If you have to tell lies to make your point you don’t really have a point.

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