Ofcom: Telcos must better support struggling customers
September 29, 2022
By Colin Mann
UK comms regulator Ofcom is urging telecoms firms to do more to support their customers through the cost-of-living crisis, as new research reveals record numbers of households are struggling to afford their communications services.
Ofcom’s annual affordability study finds that nearly a third (29 per cent) of customers – around 8 million households – are having problems paying for their phone, broadband, pay-TV and streaming bills. The number of struggling families has doubled over the last year (from 15 per cent in April 2021) and now stands at its highest level since its records began.
Younger adults aged 18-24 (43 per cent), households with children (40 per cent), benefits recipients (39 per cent) and people with a disability or limiting condition (39 per cent) are most likely to be having difficulty affording their communications services. One in seven (14 per cent) respondents said they had cut back other spending, such as on food and clothing, to afford their communications services, while 9 per cent said they decided to cancel a service.
Speaking at a recent conference attended by telecoms industry leaders, Lindsey Fussell, Ofcom’s Networks and Communications Group Director, stressed the regulator’s concerns about the prospect of large price increases for people locked into their contracts, as well as the duty on providers to treat their customers fairly – particularly during an exceptional period of hardship for many households. While Ofcom does not regulate retail prices, she pressed companies to think very carefully about whether significant price rises can be justified during the cost-of-living crisis.
Ofcom research shows that millions of low-income households are still missing out on broadband ‘social tariffs’ – special discounted superfast connections priced at around £10 (€11.18) to £20 – because providers are not doing enough to advertise this support, or are refusing to offer these packages at all.
While take-up of broadband social tariffs has more than doubled in the last six months – rising from 55,000 to 136,000 – only 3 per cent of eligible households have signed up. That leaves 97 per cent missing out on average annual savings of around £144 per year. Crucially, customers on these deals do not face the prospect of price rises mid-contract either, meaning the cost is effectively frozen.
Since Ofcom started shining a light on this issue in 2020, the number of providers offering social tariffs has increased from two to nine. But Ofcom wants to see industry go much further:
- Remaining broadband providers, including TalkTalk, Shell Energy, EE, Plusnet and Vodafone should introduce a broadband social tariff as soon as possible. Until they do, Ofcom expects these firms to waive early termination charges for any customer who wishes to switch to another provider’s social tariff.
- All providers should put a far greater focus on promoting social tariffs. Given almost 70 per cent of eligible customers are not aware that broadband social tariffs exist, Ofcom expects all providers to do much more to promote them – as well as making sign-up much easier by providing clearer signposting to these offers on their websites.
- Virgin Media should strengthen its support by offering a superfast social tariff. The company’s current basic offer is an industry outlier and does not recognise the importance customers place on speeds.
- Ofcom is also calling on all major mobile providers to introduce a social tariff.
Ofcom has also introduced new guidance on how firms should support customers in debt or struggling to pay.
As well as offering social tariffs, providers should rotate between a range of communications channels – such as letters, email, phone and text – to increase the chances of reaching customers in debt to offer support.
Ofcom’s guide also makes clear that restricting the services of someone who is particularly reliant on them – to push them into paying outstanding bills – should be avoided or limited, while disconnection should only ever be used as a last resort.
“The cost-of-living crisis is putting an unprecedented strain on household budgets,” stated Fussell. “It is essential that the industry puts its customers first, and focuses on what more it can do to help support them. This includes a much stronger emphasis on offering and promoting social tariffs, as well as thinking carefully about whether significant price rises can be justified at a time when the finances of their customers are under such pressure.”