Risk of UK digital broadband divide growing

Thanks to the ramping up of development by the UK’s service providers, the reach of fixed broadband networks has never been greater – but the same can also be said of the cost of living, and communications regulator Ofcom is calling on operators to help customers on benefits cope with rising bills.

Publishing a report on the affordability of broadband services in the UK, Ofcom found that about 1.1 million households (5%) are struggling to afford their home broadband service. That figure rises to about one in 10 among the lowest-income households.

Worryingly, the regulator warned that affordability problems were likely to worsen in 2022 because of retail price increases and the wider squeeze on household finances, putting further pressure on those who can least afford it.

Even though special discounted broadband packages – so-called social tariffs – are available to an estimated 4.2 million households that receive the Universal Credit social benefit, only 55,000 homes have taken advantage of these discounted rates so far, representing just 1.2% of those eligible. That means that millions of benefits recipients are missing out on an average annual broadband saving of £144 each, said Ofcom.

The regulator calculated that a standard commercial broadband package costs an unemployed person claiming Universal Credit an average of £27 a month – or 8.3% of their monthly disposable income. A £15 social tariff would almost halve their broadband costs, using up 4.6% of disposable income.

Yet despite such potential savings, Ofcom said its research showed that the vast majority of benefits recipients (84%) were unaware of social tariffs and take-up was extremely low.

Currently, six broadband providers – BT, Community Fibre, G.Network, Hyperoptic, KCOM and Virgin Media O2 – offer at least one of these specially discounted deals. The packages are priced at between £10 and £20 a month for broadband speeds ranging from 10Mbit/s to 67Mbit/s.

However, Ofcom’s report stressed that the regulator has so far seen limited evidence of providers actively promoting their social tariffs to eligible customers. Also, it insisted that such deals do not generally feature in broadband advertising or price comparison website searches.

In terms of real engagement with the issues, Virgin Media has changed the availability of its Essential Broadband package to all households within its network area, rather than only existing customers. For its part, BT makes its market-leading social tariff available to sign up for on the high street. BT announced it would allow sign-ups to its Home Essentials tariff in high-street EE and BT shops, with more proactive marketing of its affordable deals making it easier and faster for customers receiving Universal Credit and other legacy benefits to sign up.

Ofcom is now calling on all other broadband suppliers to support struggling households by introducing their own social tariffs. While noting the current schemes, Ofcom called out EE, Plusnet, Shell, Sky, TalkTalk and Vodafone as companies that still do not include social tariffs.

The regulator also wants to see all companies promote these deals more widely, and make sure that the process for customers to sign up is quick and simple. It said any communications with customers about price rises should also include details of available social tariffs, and providers should consider partnering with local authorities and consumer advice agencies to spread the word.