A record number of households are now struggling to afford broadband and mobile phone services, according to new research from the telecoms regulator, Ofcom.
The number of struggling families has doubled in the past year – rising to a record 29% of customers, up from 15% in April 2021.
Ofcom is urging telecoms providers to do more to support their customers during the cost of living crisis.
Read 10 ways to save money on broadband and TV bills for more advice on reducing the cost of your service, and check our latest cost of living news to help ease the squeeze.
Consumers struggling to pay for essential services
Ofcom’s research into telecoms affordability found that around eight million households are having problems paying for their phone, broadband, pay-TV and/or streaming bills.
Those most likely to be struggling with the affordability of their communications services include younger adults (aged 18-24), households with children, benefit recipients and people with a disability.
One in seven struggling households said they had cut back on other spending, such as food and clothing, to afford their communications services, while one in ten said they’d decided to cancel one of their services.
Discounted deals for low-income households
Ofcom’s research shows that millions of low-income households continue to miss out on potential savings on their broadband deals via specially discounted tariffs.
Social tariffs are discounted deals available for certain low-income customers. You’re likely to be eligible if you receive a means-tested benefit, such as Universal Credit, Pension Credit or legacy equivalents. Broadband social tariffs start at just £15 per month, and they are offered by an increasing number of providers throughout the UK.
For more information about these discounted deals and how to sign up for one, head to our guide to broadband social tariffs.
Research we conducted earlier this year showed that customers who are eligible for a social tariff could save an average of £250 per year by switching from their current broadband deal to the cheapest social tariff. But Ofcom’s research found that, while taking up social tariffs has more than doubled in the last six months, only 3% of eligible households have signed up.
Broadband providers and social tariffs
Ofcom has called for the broadband providers that offer social tariffs – including BT, Sky, Now Broadband and Virgin Media – to do more to promote them. Its research found that some 70% of customers who are eligible for social tariffs are still not aware that they exist. This echoes our own research that found that providers could do a lot more make customers aware of their social tariffs. Providers not only need to advertise what they offer, they also need to clearly outline the benefits of social tariffs which aren’t usually subject to price rises or exit fees.
Ofcom also specifically called on Virgin Media to improve what it offers with its social tariff. Virgin Media has its own fiber broadband network and offers some of the fastest connections that are widely available, yet its social tariff has an average speed of just 15Mbps, making it slower than the speeds offered by most other providers. Meanwhile, Virgin Media’s average speeds run as high as 1,130Mbps and its slowest standard tariff has an average speed of 54Mbps.
Finally, Ofcom has called on providers such as EE Broadband, Plusnet, TalkTalk, Shell Energy Broadband and Vodafone to introduce a social tariff. It has also said that any provider that does not offer a social tariff should waive exit fees for customers who wish to switch to a different provider’s social tariff.
Which? calls for more action from telecoms providers
Which? wants to see more done by telecoms providers to support their customers through the cost of living crisis, and support those who may be struggling to afford their bills, this includes:
- Enabling people to leave their contract without paying fees if their price is increased mid-contract. Providers must also carefully consider what level of mid-contract price rise is justified in the coming year, given the current inflationary pressures.
- Increasing awareness of social or discounted tariffs – including how they differ from commercial tariffs.
- Ensuring that customers moving to these social or discounted tariffs do not incur additional charges when they are signing up, such as exit fees if they are currently in contract.
Given that broadband, mobile phone and landline services have become essential, we also think they should be taxed accordingly. The amount of VAT paid on telecoms (20%) is much higher than that paid on other essential services such as gas and electricity (5%). We’re calling on the UK government to reduce the amount of VAT paid on telecoms to help consumers manage their bills during the cost of living crisis.
Rocio Concha, Which? Director of Policy and Advocacy, said: ‘Good broadband and mobile connections are essential for day-to-day life and telecoms firms must do more to support those struggling to afford their bills.
‘Which? is calling on telecoms firms to do a better job of advertising their social tariffs, including how they differ from commercial tariffs, and to ensure customers do not incur any additional charges when signing up to discounted rates.
‘Telecoms firms should allow customers on any tariff to leave without exit fees if their costs change mid-contract, regardless of whether or not these increases can be said to be ‘transparent’.’