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Broadband firms could be forced to offer social tariffs

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Written by: Emma Lunn
23/07/2021
The telecoms watchdog Ofcom says mobile phone and broadband firms must do more to support customers in financial difficulty.

The regulator stopped short of introducing new rules to better protect customers but warned of possible intervention in the future – including mandatory social tariffs.

Ofcom research shows broadband and mobile customers are getting better services while prices have been falling on average. However, many people on low incomes are struggling to pay, and not all of them are getting the support they need.

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 used by households increased by 342% over that time, and average download speeds rose by 178%.

Similarly, 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.

However, the research found that about two million households struggle to afford internet access.

Low-cost tariffs

Since Ofcom’s last report on affordability in December, BT, Community Fibre, Hyperoptic, KCOM, Virgin Media and VOXI have all introduced low-cost tariffs for people on benefits, or improved their existing ones. These are available for between £10 and £20 a month and can save low-income households more than £200 a year on average.

However, take-up of these targeted tariffs has been low, with only about 40,000 households signed up. This represents around 0.15% of all UK homes, which is only 1% of those in receipt of out-of-work benefits.

Ofcom’s research also shows that 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.

Providers need to do more

Although six providers offer targeted affordable ‘social’ tariffs for customers on low incomes, many still do not. Ofcom says providers of the ones that are available need to improve how they promote them as take-up is low.

The regulator warned that if the telecoms industry doesn’t take sufficient action to address its concerns, there would be a strong case for exploring whether mandatory social tariffs would be necessary to fill the gaps in support.

There is also considerable variation in how different companies treat customers in debt or struggling to pay their bills. This could cause some people to receive less support than others, depending on who their provider is.

Lindsey Fussell, Ofcom’s networks and communications 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.”

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