Record 8m households struggling to pay phone and broadband bills
Figures from the regulator Ofcom show that the number of households having affordability problems has doubled since last year. It has told telecoms firms to reconsider whether price hikes can be justified during the cost of living crisis.
The regulator has also asked telecoms companies to offer more cheap ‘social tariffs’ to cash-strapped customers and to advertise these deals better.
Ofcom’s annual affordability study found that nearly a third (29%) of customers – about 8 million households – are having problems paying for their phone, broadband, pay-TV and streaming bills.
The number of struggling households has doubled over the past year (from 15% in April 2021) and now stands at its highest level since Ofcom records began.
Younger adults aged 18 to 24 (43%), households with children (40%), benefits recipients (39%) and people with a disability or limiting condition (39%) are most likely to be having difficulty affording their communications services.
One in seven (14%) respondents said they had cut back other spending, such as on food and clothing, to afford their communications services, while 9% had cancelled a service.
Millions missing out on superfast ‘social tariffs’
Ofcom research shows that millions of low income households are still missing out on broadband ‘social tariffs’. These are special discounted broadband connections designed for people claiming certain benefits.
The regulator said providers are not doing enough to advertise this support, while some are not offering these packages at all.
Social tariffs on offer include BT Home Essentials which is £15 a month, and Essential Broadband from Virgin Media which is also £15 a month.
Ofcom said the take-up of broadband social tariffs had more than doubled in the past six months – rising from 55,000 to 136,000 – but only 3% of eligible households had signed up. That leaves 97% of those eligible missing out on average annual savings of about £144 a year.
Crucially, customers on these deals do not face the prospect of price rises mid-contract either, meaning the cost is effectively frozen.
Since Ofcom started focusing on this issue in 2020, the number of providers offering social tariffs has increased from two to nine. The regulator is calling for TalkTalk, Shell Energy, EE, Plusnet and Vodafone to all introduce a broadband social tariff as soon as possible.
Ofcom said that until they do, it expected these firms to waive early termination charges for any customer who wishes to switch to another provider’s social tariff.
Ofcom also urged Virgin Media to strengthen its support by offering a superfast social tariff – it only offers 15Mbps at the moment.
New protections for people in debt
Ofcom has also introduced new guidance on how firms should support customers in debt or struggling to pay.
It said providers should rotate between a range of communications channels – such as letters, email, phone and text – to increase the chances of reaching customers in debt to offer support.
The regulator also said that restricting the services of someone who is particularly reliant on them should be avoided or limited, while disconnection should only ever be a last resort.
Lindsey Fussell, Ofcom’s networks and communications group director, said: “It is essential that the industry puts its customers first, and focuses on what more it can do to help support them.
“This includes a much stronger emphasis on offering and promoting social tariffs, as well as thinking carefully about whether significant price rises can be justified at a time when the finances of their customers are under such pressure.”
Matthew Upton, director of policy at Citizens Advice, said: “Social tariffs could be a lifeline for those struggling most with mobile and broadband bills, but millions are missing out on saving £144 each year.
“The cost-of-living crisis is only gaining pace, while the number of people struggling to afford their telecoms bill has doubled over the last year. Firms must stop dragging their heels and do more to help people move onto social tariffs.”