Chancellor’s Meet with UK Regulators Delivers no Surprises for Broadband Prices
Consumers hoping for some respite from spiralling price hikes on their broadband ISP and mobile operator bills will have to keep waiting. Yesterday’s meeting between the Chancellor of the UK Government, Jeremy Hunt, and the heads from all of the UK’s major regulators, including Ofcom, appears to have produced nothing new.
At the end of last week we reported (here) that the UK Chancellor, Jeremy Hunt, would this week meet with the heads from all of the UK’s major regulators as part of a drive to help bring down inflation. The goal was to encourage energy, water, broadband and mobile providers not to make excessive price hikes and to ensure they’re passing on any wholesale costs savings to consumers.
Politicians always like to appear as though they’re doing something, often even when the outcome delivers nothing new, and that’s certainly the impression we got after the conclusion of yesterday’s meeting. But so far as we can tell, from the limited public feedback, the result was a vague “action plan” and Ofcom also committed to do what we already knew it was doing. So no cut to the rate of VAT on telecoms bills or any bold new measures.
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Instead, Ofcom merely said that they’d continue pushing broadband and mobile providers to put more effort into raising the awareness of cheaper social tariffs for those on state benefits, which is something they’ve been doing for the best part of two years now – with a moderate degree of success (here). Likewise, they reiterated a call for ISPs to waive fees for any customers who want to switch providers to access a social tariff.
On top of that, the regulator added that they’re also planning to publish a review into mid-contract price hikes by the end of 2023, to “ensure consumers are sufficiently aware of what they are signing up to“. But they’d said that before too (here), and the Advertising Standards Authority (ASA) has arguably already had more of an impact on this front (here).
Ofcom Chief Executive, Dame Melanie Dawes, said:
“When the pandemic hit, our telecoms industry rose to the challenge of keeping people connected during an extraordinary public health crisis. Now, companies need to step up again to support their customers as households across the country face a generational crisis with their budgets.
We’ve put pressure on providers to offer social tariffs for those most in need, but that’s only half the job. More than half of eligible households are not aware of them, and only 5% have actually switched to one of these cheaper packages, which means millions are still missing out.
It’s not enough to expect people to find out about these by themselves – providers must act now to make sure customers know what support is available. Ofcom will be urging telecoms firms to take immediate steps to raise awareness of social tariffs and drive consumer take-up, and will work with government and other relevant bodies to support industry efforts.”
In fairness, some of the flack that ISPs have taken over recent price hikes has not been entirely accurate. Historically, the biggest providers have always tended to hike their prices by more than the rate of inflation, so this in itself is nothing new. Prior to the “CPI/RPI + X%” model they’d typically rise by around 4-6% every year and, even had they not adopted inflation into their models, we’d still have expected to see similar hikes occurring.
The reason for that is because providers, much like consumers, are also suffering under the burden of rising supplier, lease and labour costs, as well as extremely high energy prices (businesses weren’t protected by the energy price cap like consumers), the ever-rising user demand for data, the cost of adding all sorts of new services (e.g. FTTP) and the costly weight of needing to implement all sorts of new Ofcom rules and government legislation (e.g. social tariffs, automatic compensation etc.).
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At the same time, not all broadband and mobile operators or packages play the price hikes game. Many smaller providers have kept their prices frozen, while other services, such as the new generation of full fibre (FTTP) packages, have overall continued to come down in the price. Suffice to say that the picture is much more three-dimensional than may be apparent at first glance, and strong competition is playing a role.
Nevertheless, we do feel as if the government and Ofcom are failing in a number of areas, which we’ve covered before. For example, we think it’s only fair that any consumer being hit by a mid-contract hike should be allowed to exit their contract penalty free. Providers should also be required to reveal their post contract prices for the packages they sell (i.e. after the first-term discounts have ended), which can sometimes be double the promoted price. A VAT cut would also be welcome on bills.
More transparency over how input costs are directly impacting future price hikes would also be welcome and might help to spot the influence of greed vs necessity. But it may be wishful thinking to expect that level of detail from all ISPs, particularly as there may be issues of commercial sensitivity to consider in the data (you can tell a lot about a rival from the release of such information).
Once again, it’s worth remembering that the price we all pay for communication services is largely dwarfed by the colossal hikes in energy (e.g. gas and electricity), petrol, food and other bills. So, a 14-17% annual hike in broadband and mobile bills is painful, but equally a lot of people have seen their bills rise much faster in other key areas.
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UPDATE 10:15am
We’ve had a few industry comments.
Tom Williams, CEO and Co-Founder of Lit Fibre, said:
“We welcome the pressure from the Chancellor to ensure utility companies pass cost savings onto customers. Households up and down Britain have been overpaying for broadband services for far too long and many face difficulty exiting these expensive contracts; there is no excuse for hiding behind inflation to keep charging customers such high costs that they’re locked into for long periods.
Utility companies have a responsibility to ensure their services are affordable and that customers are getting the highest quality service for their money. Lit Fibre builds its own network and sells services direct to consumers which means we can always provide the best level of service for the best price, and why we never introduce mid-contract price increases. Our focus on a direct-to-consumer model enables us to put the customer first and deliver exceptional quality service and customer support.”
Jeremy Chelot, CEO at YouFibre, said:
“The UK has been suffering from low broadband speeds and high prices for far too long. The large Internet Service Providers have been overcharging customers for years because of a lack of competition at the infrastructure level, largely caused by the Openreach monopoly, and a lack of investment in full fibre infrastructure. The UK has only recently begun to catch up with the rest of Europe because alternative networks have forced the big players, like BT and Virgin Media, to accelerate the fibre deployment.
We don’t believe these price rises are justified, but intervention from the Government is not the solution. Alternative networks like YouFibre, Hyperoptic, and Community Fibre are working hard to offer consumers ultrafast internet at fair prices and it’s time for them to make their voices heard.”
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 X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Cityfibre aren’t going to like all this talk about keeping prices down.
While the government are attempting to keep prices down, Cityfibre have been trying to keep prices higher, doing everything possible to prevent BT Openreach from cutting prices.
They just need to:
-ban in-contract price rises (else what’s the point of the contract if it’s a 1-way shafting)
-remove VAT from broadband, we’ll have weird pricing for 12 months then it’ll go “back to normal” as the providers absorb the weird pricing into extra profit.
Once that’s done it helps Altnets because there’s no enforced min pricing, consumers get a win because when they sign a contract it actually means something and everyone gets a slight price reduction immediately after the VAT is removed.
Also I’d scrap social tariffs and those on benefits should be paid more in line with real costs.
What you said is spot on
Agree with the banning price raises mid-contract. Instead of removing VAT we should discuss lowering it on telecoms and handsets to 5% like other essential utilities.
We should also work on cutting people out of the scope of benefits, lots seemingly don’t deserve their handout.
Can they remove “standing charges” from energy too, while they’re at it?
Matt: “Also I’d scrap social tariffs and those on benefits should be paid more in line with real costs.”
The benefiterati got a 10.1% rise this year, several multiples of the pay rise I got. Personally I think the government should be doing more to make work rewarding.
Mark, you mention that other utility costs have risen faster than telecoms. However, you should say that whilst gas, oil and electric will like,y fall, there is little prospect of mobile and broadband bills falling. Failure to show some compassion for consumers will lead, inevitably, to the next government taking some action to provide a better deal for consumers, most likely in banning in-contract price hikes.
The government are useless and also chancellor are waste of time! Also Ofcom as well. More of the same as history tell.
Ofcom does not care about bills, otherwise they would have already done something about them. Same thing with chancellor who would’ve reduced taxes rather than raise them beyond record levels
Instead, Ofcom is more concerned about being an enforcement agency to keep the establishment in power. Today they banned Lawrence Fox, who is running in Boris Johnson’s old seat in Uxbridge, from presenting his case on TV, claiming he would get an unfair advantage over the other candidates. Meanwhile, he is also banned from the hustings with the 4 establishment parties, who all have the same policies.
Nowhere in history the good guys have been on the side of censorship but now they are using to stay in power. Democracy is dead, all that remains is the illusion that red/blue/yellow/green are different from red/blue/yellow/green
Broadband is rapidly becoming a staple of the UK way of life, we are being forced into using it for banking, health, council business, streaming and all sorts of things we used to be able to do in person. When FTTP is commonplace you can bet your life the ISPs will be looking at charging more for quantity and quality. It needs to be a social necessity like water gas and electricity should be.
Not being able to afford bills? Not being able to speak to the public for an election? Forget about that, today they just cancelled Nigel Farages bank account!
Imagine trying to function without a bank account, can’t set up direct debit to pay for broadband, can barely even live in society with so many places banning cash. For now it’s only Tristan Tate, Triggernometry podcast, Russell Brand, Nigel Farage.. who knows which Brit will be next, they are going after the more prominent ones first
Digital exclusion is done by option, society exclusion is the bigger concern here
@William Gange, What do you mean Broadband is rapidly becoming a staple of the UK way of life? It already is. Very difficult to live in the modern world without any sort of internet connection, be it on mobile phone or at home. Not everyone will need the super-duper speeds, most will get buy with even the average FTTC speeds but even to do the simplest things these days some sort of connection is needed.
Getting stupid that you need an app for this, an app for that, need to do this and that on the internet, can’t even get though to the Doctor without the internet these days.
Ofcom didn’t prevent Fox specifically from doing anything, John. It’s been a part of the Broadcast Code that candidates can’t be presenters since at least 2005. I’m sure you may find earlier references to this if you’d like. References to this exact rule may be easily found from both 2022 and 2021.
https://www.ofcom.org.uk/__data/assets/pdf_file/0027/35856/broadcast-code-2005.pdf
… so ofcom is censoring Fox using an older code. Electoral commission is banning him from hustings.
The UK has become a banana republic when they are now going after bank accounts of the political opposition. It will only get worse when CBDCs are in play, now that in their Chinese Davos meet, they’ve confirmed what the “conspiracy spoilers” have been saying for years, that CBDCs can be programmed with expiry dates and with limitations on what can be purchased
Agreed also with ad47, it is insane how they are pushing for everything to be reliant on failed apps which cost fortunes to develop and maintain.
The Electoral Commission is banning him from nothing. The Electoral Commission doesn’t decide who gets to attend hustings, those holding them decide the invitation list.
Hillingdon Chamber of Commerce are hosting them and alongside the London Chamber of Commerce decided who would be invited.
Ask them why he isn’t there.
‘… so ofcom is censoring Fox using an older code.’
It’s been part of the code since at least 2005. It remains in the most recent version and has been in every one published since. Nothing was changed, Ofcom are censoring no-one. Long-standing rule.
Do your own research and you can confirm this objective reality alongside the details of the Electoral Commission and the Uxbridge hustings, or apparently unquestioningly believe what you read on social media because it’s what you want to believe and be objectively wrong: your call.
CBDCs will be the nail in the coffin in freedom
I guess XGS does not see the issue with the opposition candidate not being allowed on 2 important mediums of communication. Is it really democracy when only people on social media can hear his policies
I mean if you look at the event page, he’s not there
https://www.eventbrite.co.uk/e/uxbridge-south-ruislip-hustings-tickets-667414122607
XGS hasn’t made any judgment beyond to point out that it’s either not the work of the government in the case of the hustings or long-standing rules and regulations that should neither be a surprise to a serious political party or something to made a big issue of.
Ask those holding the hustings to explain their selection process – it’s considered best practice for them to do so. You can find the details of how they may select on the Electoral Commission website and, indeed, raise it with them if you feel the explanation inadequate.
We’re beyond the denial stage “censorship is not happening”, into the acceptance stage “censorship may be happening but it isn’t that bad, it’s not the govts fault”, next will be enforcement “censorship is happening and it is a good thing”
You will vote for the establishment, we will ban all opposition and you will be happy
I see evidence of that it’ll be the thing that tips me over to physical protest, assuming it hasn’t been banned by then.
Macron today called for the censorship of social media, blaming the riots on social media posts rather than his own authoritarianism. The EU have also called for censorship of social media
The UK online censorship bill is coming. Remove social media and the only thing left will be the BBC fact checkers who will fact check true on the outrageous claims being made on women biology, and ban any discussion of reality
Canada has already implemented censorship, Google has just announced it will pull all news from Google searches. It has severe punishments for even Canadian YouTubers. They have mandated Jordan Peterson to attend a meeting with authorities over his tweets. The state propaganda CBC will be pretty much the only source of news, just like in North Korea by mandate of Justin Trudeau Castro
What is happening to other countries will be imported to the UK as they all copy each other
No need to go that far. Our next door neighbor France has caused Rumble to block french people because Rumble did not want to censor content that the French state wanted
Democracy is dead already. Britain are finished!
Cheap, reliable energy is at the foundation of prosperous nations hence the phenominal growth of Asian countries.
Ironic a guy named Klaus is saying this considering Klaus Schwab is literally on camera saying he penetrated cabinets around the world and whose energy policies are being followed religiously, causing high energy costs to the detriment of us peasants
If they really want to combat did you digital exclusion they have get to those parents that love ones on guardianship because most people on guardianship are smarter than parents.
They tried to put my leased line up by 15.4% I told them no so they froze it for 4 years. Surely they build the costs in for them? How can you say Unlimited data means cost rises when the LL is designed with unlimited data anyway? Sounded like cods wallop to me.
I do think its about time elected MP’s and their families are stopped being shareholders or made to divest any holdings when they take office. Its becoming more obvious as time goes on that they are doing what is best for their dividends and not customers or their electorate.
What I am trying to say people who are digitally excluded are often people who have learning disabilities and autism manly because parents lack understanding because they think they know too much and try and keep them away from technology such as a iPad or a PC. People who are under a guardianship order usually know more then there parents carers and social workers this is why I am against guardianship orders they say guardianship is for people who lack capacity what I can’t understand if they lack capacity why do they understand more about the news technology TV programmes and soaps and music lol I know more about computers then my mum hell my mum can’t work a mobile phone. Yes guardianship orders are good people who lack capacity like Dementia Alzheimer’s disease or terminally I’ll learning disability and autism are not mental health.
“Alternative networks like YouFibre, Hyperoptic, and Community Fibre are working hard to offer consumers ultrafast internet at fair prices and it’s time for them to make their voices heard.”
Didn’t Comm Fibre impose a mid-contract price rise?