{"id":34877,"date":"2023-06-29T08:27:12","date_gmt":"2023-06-29T07:27:12","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=34877"},"modified":"2023-06-30T10:34:05","modified_gmt":"2023-06-30T09:34:05","slug":"chancellors-meet-with-uk-regulators-delivers-no-surprises-for-broadband-prices","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2023\/06\/chancellors-meet-with-uk-regulators-delivers-no-surprises-for-broadband-prices.html","title":{"rendered":"Chancellor’s Meet with UK Regulators Delivers no Surprises for Broadband Prices"},"content":{"rendered":"

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<\/a>, appears to have produced nothing new.<\/p>\n

At the end of last week we reported (here<\/a>) that the UK Chancellor, Jeremy Hunt<\/strong>, 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\u2019re passing on any wholesale costs savings to consumers.<\/p>\n

NOTE:<\/strong> 220,000 households now take a cheaper social tariff<\/a> for broadband or mobile (up from 136,000 six months ago) – representing 5.1% of those on Universal Credit (4.3 million).<\/div>\n

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<\/em>” and Ofcom<\/a> 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.<\/p>\n

Instead, Ofcom<\/a> 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<\/a>). Likewise, they reiterated a call for ISPs to waive fees for any customers who want to switch providers to access a social tariff.<\/p>\n

On top of that, the regulator added that they’re also planning to publish a review into mid-contract price hikes<\/strong> by the end of 2023, to “ensure consumers are sufficiently aware of what they are signing up to<\/em>“. But they’d said that before too (here<\/a>), and the Advertising Standards Authority<\/a> (ASA) has arguably already had more of an impact on this front (here<\/a>).<\/p>\n

Ofcom Chief Executive, Dame Melanie Dawes, said:<\/strong><\/p>\n

“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.<\/p>\n

We\u2019ve put pressure on providers to offer social tariffs for those most in need, but that\u2019s 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.<\/p>\n

It\u2019s not enough to expect people to find out about these by themselves \u2013 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.”<\/p><\/blockquote>\n

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%<\/em>” 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.<\/p>\n

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<\/a>) and the costly weight of needing to implement all sorts of new Ofcom rules and government legislation (e.g. social tariffs, automatic compensation etc.).<\/p>\n

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<\/a>) 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.<\/p>\n

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.<\/p>\n

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).<\/p>\n

Once again, it\u2019s 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.<\/p>\n

UPDATE 10:15am<\/strong><\/p>\n

We’ve had a few industry comments.<\/p>\n

Tom Williams, CEO and Co-Founder of Lit Fibre, said:<\/strong><\/p>\n

“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\u2019re locked into for long periods.<\/p>\n

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.”<\/p><\/blockquote>\n

Jeremy Chelot, CEO at YouFibre<\/a>, said:<\/strong><\/p>\n

“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<\/a> 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<\/a> and Virgin Media<\/a>, to accelerate the fibre deployment.<\/p>\n

We don\u2019t believe these price rises are justified, but intervention from the Government is not the solution. Alternative networks like YouFibre<\/a>, Hyperoptic<\/a>, and Community Fibre are working hard to offer consumers ultrafast internet at fair prices and it\u2019s time for them to make their voices heard.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

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.<\/p>\n","protected":false},"author":1,"featured_media":21148,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[36,38],"class_list":["post-34877","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-ofcom-regulation","tag-politics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nChancellor's Meet with UK Regulators Delivers no Surprises for Broadband Prices - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Consumers hoping for some respite from spiralling price hikes on their broadband ISP and mobile operator bills will have to keep waiting. 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