Ofcom Find 380,000 UK Homes on Cheaper Social Broadband Tariffs

Ofcom has today published their latest biannual UK consumer affordability report, which reveals that the take-up of cheaper social broadband ISP and mobile tariffs for those on state benefits has increased to 380,000 households (up from 220,000 six months ago). But that still represents just 8.3% of households on Universal Credit (4.6 million).

Consumer broadband, phone and mobile services are often considered to be quite reasonably priced in the UK, but there are always those – often in the most disadvantaged groups (i.e. low income, unemployed etc.) – who may struggle with paying their bills. This is being fuelled further by the ongoing cost-of-living crisis, which has pushed more people into financial difficulty.

The proportion of consumers reporting difficulty affording their communications services has increased from 15% in April 2021 to a peak of 32% in October 2022 and remains close to this level at 30% in October 2023. This equates to approximately 8.5 million UK households. The households that were most likely to have affordability issues were younger households (with members aged between 18 and 24), those in receipt of benefits, those with children, and those with a resident with an impacting/limiting condition.

The UK Government and Ofcom have largely responded to this crisis by encouraging more mobile and broadband providers to proactively introduce and promote low-cost Social Tariffs. The regulator suggests that, on average, these could save an eligible household around £200 per year and cost between £12 and £23 a month (much less than comparable commercial products). A fair number of ISPs and mobile operators now offer such plans, but awareness remains a key issue.

The latest report states that 55% of eligible households continue to be unaware that such tariffs even exist, which is actually up from 53% six months ago, albeit still better than the 70% recorded last year. Suffice to say, the issue of awareness seems to have plagued a bit, although we suspect that will change next year once ISPs like Virgin Media begin to proactively inform customers about it (here).

In terms of take-up, BT has the largest share of broadband customers taking a social tariff (72%), which is largely because they’ve been offering one for years and the rest are fairly recent (brand awareness is another factor). After that comes Sky Broadband (13%), Virgin Media (6%), Vodafone (4%), KCOM (1%) and Shell Energy (0.3%). TalkTalk is the only major broadband provider not to offer a social tariff.

The report also includes a few other highlights, which we’ve summarised below.

Highlights from Ofcom’s Pricing Trends Report

➤ Average broadband and mobile prices have fallen in real terms in the last five years. Ultrafast promoted prices reduced by 15% and superfast list prices reduced by 13%. Average list and promoted prices for standard broadband dual-play bundles decreased by 5% and 9% respectively. The average monthly price of mobile phone services, excluding handset costs, fell by 33% in real terms the five years to 2023, despite average data use having increased by 249% over this period.

➤ It is usually cheaper for people with fixed broadband to purchase their services as part of a bundle, rather than on a standalone basis. Our analysis of typical ‘baskets’ of communications services bought by households shows that those with a fixed broadband connection could save between 17% and 34% when they purchase bundled services (if they also need landline).

➤ Standalone fixed broadband is a cheaper option for those who do not need a landline service. In September 2023, average monthly list and promoted prices for standalone fixed broadband services were 14% and 15% cheaper, respectively, than the average list and promoted prices for fixed broadband bundled with a landline.

➤ Ultrafast broadband can be cheaper from smaller providers. Prices offered by the UK’s independent full-fibre network providers are frequently lower than those offered by established fixed broadband providers. Smaller full-fibre providers were offering 900 Mbit/s to 1 Gbit/s broadband services for between £25 and £50 per month in October 2023, compared to around £50-£60 for similar services from larger providers.

➤ Landline prices were stable or fell in real terms in the year to September 2023. Average landline line rental prices remained stable in real terms in the year to September 2023 (a 6% increase in nominal terms) and there were falls in the prices of call bundles and out-of-bundle calls in real terms during this period.

➤ Mobile prices based on the profile of an average user (i.e. a basket based on average data and voice use) were unchanged in real terms, despite increasing data use. The average monthly price of a mobile service (excluding handset cost), based on average use across all mobile users in 2023, was unchanged in real terms in the year to Q2 2023 compared to average prices in 2022 (in nominal terms it was 7% higher). This was despite an estimated 1.6 GB (23%) increase in average monthly data use. UK mobile prices were second cheapest (after France) in Q3 2023 among the six comparator countries we analysed, and lower than in Germany, Italy, Spain and the US.

➤ There were large price increases for SIM-only tariffs offering between 1 and 10 GB of inclusive data. Our analysis shows that average monthly promoted prices for these services increased by 23% in real terms in the year to September 2023. The main drivers of this increase were not the price of individual tariffs going up, but several lower-cost providers stopping service offerings, some services with lower data allowances being withdrawn, and new, more expensive, ones with larger inclusive data allowances being launched.

➤ Tariffs that include airtime and a handset typically cost more than buying a handset outright. Pay-monthly mobile tariffs including airtime and a handset (either in a combined or split contract) accounted for 37% of all mobile subscriptions in Q2 2023. Our analysis shows that, on average, it was 23% cheaper to buy a handset separately and use it with a SIM-only plan across the mobile connections we looked at. Many mobile providers have stopped offering combined handset and airtime contracts in favour of separate (split) device and service contracts.

Finally, a quick reminder. We know social tariffs can be a divisive topic for some, but that is not an excuse to abuse the comment system in order to post offensive remarks toward those who take state benefits. Such posts are against our rules and will be removed.