{"id":28731,"date":"2021-10-01T09:41:07","date_gmt":"2021-10-01T08:41:07","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=28731"},"modified":"2021-10-01T13:54:00","modified_gmt":"2021-10-01T12:54:00","slug":"high-energy-costs-risk-impact-on-uk-broadband-and-mobile-prices","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2021\/10\/high-energy-costs-risk-impact-on-uk-broadband-and-mobile-prices.html","title":{"rendered":"High Energy Costs Risk Impact on UK Broadband and Mobile Prices"},"content":{"rendered":"

As the cost of gas spirals, inflation surges and most of us start to look at rises in our annual fuel bills, it’s sometimes easy to forget that such increases can also hit broadband ISPs and network operators too. Suffice to say, if the situation continues, then consumers could be in for a wider array of bill rises.<\/p>\n

At present many operators tend to sign long-term energy agreements, which based on initial feedback typically seem to run for periods of 2-5 years, and these are often agreed with primary suppliers that are much more stable than the smaller fry in the consumer space. As a result, most providers currently have some protection against the current market turbulence in energy prices.<\/p>\n

NOTE:<\/strong> Energy (gas\/electric) charges for telecoms networks may differ from consumer charges, so the two are not always directly comparable.<\/div>\n

However, the longer the current trauma continues, the higher the likelihood of network operators being hit in the same sort of way as ordinary consumers. Inevitably, some network operators, ISPs and data centres have already been caught out, since there will always be a few companies that end up with a contract renewal that just so happens to fall at the worst possible moment for energy prices (i.e. right now).<\/p>\n

The Industry Impact<\/strong><\/span><\/h3>\n

ISPreview.co.uk has been collecting off-the-record feedback from across the telecoms sector and, needless to say, the pain is starting to be felt by some. One communications provider said just two weeks ago, before the prices surged again, that their averaged contract prices were 8p\/kwh higher than last year on a one-year term, and 5p\/kwh on a three-year term.<\/p>\n

Fast-forward to today, and other comms providers are now reporting an increase of c.10-11p\/kwh on a three-year term (i.e. prices have effectively doubled or more). Some companies are even considering floating on mildly higher out of contract rates for a while, rather than lock themselves in for a longer term when the prices are this high.<\/p>\n

Whatever the approach taken, it’s a tricky balancing act, particularly with some energy providers allegedly indicating to comms providers that prices may continue to rise until “at least<\/em>” November, while the problem of disruptively high rates itself may well run into the new year.<\/p>\n

The fact that this can impact operators at every stage of the digital connectivity chain – from infrastructure providers, to data centres \/ exchanges and retail ISPs – means that by the time the link gets to consumers (and businesses) there is a collective impact. Naturally, recent suggestions in the media that big energy companies could also be at risk of collapse, probably won’t do much to help any of this.<\/p>\n

On top of all this, it’s worth noting that access to petrol and diesel is another ‘energy issue’ that can disrupt related services, such as engineering operations like service upgrades, repairs and new fibre builds.<\/p>\n

The Consumer Impact<\/strong><\/span><\/h3>\n

Thankfully, most broadband connections use very little energy (excluding your home kit) and so the individual impact upon consumer bills, which for some may not be felt until further down the road, probably won’t break the bank. But the initial collective impact for an individual operator can still be significant, especially if it comes as a sharp, sudden shock to see how much energy costs have risen between the previous and new contract.<\/p>\n

However, just to make matters worse, inflation is still on a rapidly upward trajectory, which means that any future consumer price hikes linked to inflation could get ugly (we warned of this before<\/a>). The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.0% in the 12 months to August 2021. According to the Office of National Statistics (ONS), the increase of 0.9 percentage points is the largest increase ever recorded in the CPIH National Statistic 12-month inflation rate series, which began in January 2006.<\/p>\n

Suffice to say, consumers will need to keep a close eye on how their broadband provider and mobile operator handles future price rises (we expect that some may need to adjust their terms again). Initially, providers like BT<\/a>, EE<\/a>, Plusnet<\/a>, Three UK<\/a>, Vodafone<\/a>, O2<\/a> and TalkTalk<\/a>, which have in the last year or so adopted the CPI + X% (X often equals 3-4% on top of the CPI rate) approach to annual price hikes, may produce the biggest hikes.<\/p>\n

Some consumers could then opt to mitigate any heavy hikes by switching ISP or contacting their existing provider to try haggling for a lower price when a hike hits (Retentions \u2013 Tips for Cutting Your Broadband Bill<\/a><\/strong>), although your mileage may vary. Just remember, most of the big providers will usually hike their prices at least once a year.<\/p>\n","protected":false},"excerpt":{"rendered":"

As the cost of gas spirals, inflation surges and most of us start to look at rises in our annual fuel bills, it’s sometimes easy to forget that such increases can also hit broadband ISPs and network operators too. 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