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Telecoms firms need to do more to help customers struggling to pay bills

Ofcom has warned telecoms firms they need to do more to support people in financial difficulty, or they could face new interventions to better protect customers.

  • Average telecoms prices fall in recent years, as data use soars
  • But around two million UK homes still struggle to afford internet access
  • Targeted affordable tariffs can save low-income households over £200 a year, but not all providers offer them and take-up is low
  • Telecoms companies could face further intervention if they don’t do more to help those who need it most

Last year, we reported on the challenges some customers face with paying their telecoms bills, and what providers were doing to help them. We welcome the action some companies have taken since then to introduce low-cost packages for people on benefits, or improve their existing ones.

New research published today reveals that 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 are getting the support they need.

Many telecoms customers getting more for less

The broadband and mobile markets offer customers a wide range of choice, with different deals available to suit different needs. Our annual Pricing Trends report provides analysis of what UK customers paid for their broadband and phone services in 2020.

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 households used 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.

Many people could pay less and get a faster service today. Full-fibre broadband networks, which are much faster and more reliable than the ones most people use today, are growing fast and now available to 21% of the UK. Some full-fibre services that provide speeds of around 1 Gbit/s are available for as little as £25 a month.

But many still struggle to pay their bills

New data we have collected on the affordability of communications services shows that around two million households struggle to afford internet access.1

Since our 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.2

However, take-up of these targeted tariffs has been low, with only around 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.

Our latest 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.3

Providers have made some progress, but there is more to do

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

Providers are not currently required to offer social tariffs and it would be for the UK Government to determine whether a formal review of social tariffs should be carried out.4

However, if the telecoms industry does not take sufficient action to address our concerns, we think there would be a strong case for exploring whether mandatory social tariffs would be necessary to fill the gaps in support, alongside other potential options.

There is also considerable variation in how different companies treat customers who may be 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.

So, we are considering whether the protections in place for customers in debt or struggling to pay should be strengthened. We have invited all interested parties to share their views with us on this.

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.”

Notes to editors

1. We interviewed a representative sample of 7,191 UK households between November 2020 and April 2021, and findings largely reflect the average experiences in the month prior to interview. Full research methodology is available in our Technical Annex.

2. Targeted affordable tariffs with income eligibility criteria:

Product Price Speed Eligibility
BT Home Essentials £15 a month 36 Mbit/s Universal Credit (UC), Jobseeker’s Allowance (JSA), Employment Support Allowance (ESA), Pension Credit (Guarantee Credit)
BT Home Essentials 2 £20 a month 67 Mbit/s
Community Fibre £10 a month 10 Mbit/s UC, Income-based JSA, Income-related ESA, Housing Benefit, Personal Independent Payment (PIP)
Hyperoptic Fair Fibre 50 £15 a month 50 Mbit/s

UC, Income-related JSA, Income-related ESA, Pension Credit, Housing Benefit, PIP

Hyperoptic Fair Fibre 150 £25 a month 150 Mbit/s
KCOM Lightstream Flex £19.99 a month 30 Mbit/s UC zero earnings, JSA, Income-related ESA, IS, Pension Credit, Housing Benefit, PIP
Virgin Media Essential Broadband £15 a month 15 Mbit/s Universal Credit
VOXI For Now £10 a month 5G where available
UC (employment based), JSA, ESA

3. Total debt of broadband and mobile customers:

4. The UK Government’s legislation to implement the European Electronic Communications Code gave Ofcom the power to impose social tariffs on all providers where needed to help the most vulnerable. However, that power can only be exercised following a direction from the Secretary of State to Ofcom to review the affordability of relevant services, and subsequent approval by the Secretary of State of Ofcom’s recommendations.

Channel website: https://www.ofcom.org.uk/

Original article link: https://www.ofcom.org.uk/about-ofcom/latest/media/media-releases/2021/help-customers-struggling-to-pay-bills

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