Clare Lees was shocked this summer when she saw her monthly broadband bill had jumped to almost £40.
The 61-year-old contacted EE, her longstanding provider, to ask if it was offering a cheaper package for people receiving benefits. But the BT-owned company said it had no “social tariff” and warned her she would be penalised for trying to switch providers while in contract.
“If I didn’t have a lodger I’d be in a real mess,” said Lees.
As the cost of living crisis intensifies, telecoms companies are facing increased scrutiny from regulators and politicians over the extent of their support for struggling customers.
Several this year boosted underlying revenue after raising their prices by 3.9 per cent above inflation and are poised to push ahead with similar increases next year.
While a number of broadband providers offer social tariffs to households on benefits, EE is one of many that has yet to do so. Others include Shell, Plusnet, O2, Three and TalkTalk.
Labour this month urged the government to prevent operators from pushing ahead with above-inflation price rises and to “take action against” mid-contract increases and early termination costs for customers looking to move to social tariffs.
In its latest affordability report, published last month, Ofcom said almost a third of British people, or 8mn households, were struggling to pay their telecoms bills.
The watchdog found only 3.2 per cent of the 4.2mn households receiving universal credit were on a social tariff, while 70 per cent of benefits claimants did not know such products existed.
And with inflation forecast by the Bank of England to remain above 10 per by the end of the year, when most 2023 prices will be decided, telecoms pricing could rise by as much as 15 per cent early next year compared with current prices.
“We want telecoms companies to think very carefully about what they’re doing at this exceptional time,” said Fergal Farragher, Ofcom’s director of telecoms consumer protection. “At a minimum we’re saying you should put [a social tariff] in place. If you don’t, you shouldn’t penalise your customer for changing provider.”
Telecoms groups have been criticised for securing “windfall profits” as households are squeezed, but industry insiders and observers said the rises were needed to cover rising costs as well as investment in new infrastructure.
“The price increase has merely compensated for other drags . . . as their energy hedges expire and wage demands increase,” said James Barford, analyst at the media consultancy Enders Analysis. He pointed to BT’s modest target for 2022 of 4 per cent growth in earnings before interest, tax, depreciation and amortisation.
Philip Jansen, BT’s chief executive, said in July that “we need to pass increased costs on to consumers” across mobile and broadband.
He described “low prices” as not “always the best answer”, adding that they had contributed to the slow rollout by operators of full fibre and 5G.
Ahmed Essam, chief executive of Vodafone UK, said that although providers had a duty to help customers in difficulty, “government can play a bigger role” by, for example, cutting or removing the value added tax on social tariffs.
Even among companies that provide social tariffs, there is a discrepancy in how easy they are to find via company websites and search engines.
And according to critics, major telecoms groups have not given customers reasonable opportunity to switch providers because they have not clearly signposted in-contract price rises.
Research in January by Hyperoptic, a broadband provider, found 60 per cent of people were unaware of forthcoming price rises.
The Committee of Advertising Practice, responsible for producing and upholding advertising codes, is consulting on new guidance that would compel operators to make price rises much more prominent in advertisements “to avoid misleading customers”.
The Department for Digital, Culture, Media & Sport said it was “committed to helping households through the cost of living crisis” and had negotiated with telecoms companies to provide social tariffs. It added that all taxes were kept under review.
BT said it would “like to apologise to Mrs Lees” and that it would introduce a new social tariff for EE and Plusnet broadband customers soon.
But Lees called on operators to be “more flexible” by allowing customers to cut their data packages or switch providers. “If they are supportive and help people through these crises, they’ll ultimately create more loyalty to their brand.”
Source: Economy - ft.com
