Ofcom’s consumer advocate and Group Director, Lindsey Fussell, gives the lowdown on telecoms price increases and what to do about them.
You may have seen reports in recent weeks about broadband and phone companies’ plans to increase prices for their customers.
We understand this news will be particularly unwelcome at a time when household finances are already under significant strain, with the cost of living increasing sharply.
While Ofcom doesn’t set retail prices, we are concerned about the prospect of rises that are significantly above inflation – and the squeeze on those who can least afford them.
We expect providers to do more to tell eligible customers in receipt of certain benefits about the special cheaper deals available to them, sometimes known as a ‘social tariff’. They must also make it swift and simple to sign up.
Finding a cheaper deal
The phone and broadband markets in the UK are extremely competitive. So if you are past (or approaching) the minimum term of your contract, you can look for a cheaper deal – either with your existing provider, or by switching to a new one.
Our research suggests that people who haggle with their provider or shop around could avoid a costly price hike – and may get a better service without having to pay more.
Under Ofcom rules, providers must warn customers when their current contract is ending, and what they could save by signing up to a new package. This has led to more than one million people securing a better deal in a single year. And millions more who are out of contract today could do the same.
Find out if you’re one of them, and speak to your existing provider about the best deal they can offer you. Then compare that with deals from other providers using an Ofcom-accredited price comparison site and see which best meets your needs and budget. Here are some questions to ask:
- Am I still in my initial contract period?
- How much am I paying?
- What am I getting for that price?
- Can I get a better service, and how much will it cost?
- How long will that contract be for?
- Do I need to pay any fees to sign up to a new deal?
- What happens when that contract ends?
Where does my money go?
Many customers will be asking themselves why their provider is increasing its prices, and where does that money go?
Some of this money is needed to invest in better networks. We recognise that to maintain and upgrade the communications services we all depend on, telecoms providers need to build networks for the future.
The pandemic has shown just how important reliable telecoms services are to the way we live. Internet use reached record levels, at a time when millions of families across the UK had to juggle their work, education and social lives from under one roof.
As a result, people are using three times as much data as five years ago. Demand from data-hungry households is set to further increase in future as the use of connected devices around the home become more commonplace.
People who haggle with their provider or shop around could avoid a costly price hike
Ofcom has been working with the telecoms industry to ensure that the networks we depend on to deliver these services can handle that significant increase in demand. This requires significant funding – and investment in telecoms network infrastructure increased by almost 10% to more than £6.3bn in 2020.
As a result, more than eight million homes are now able to benefit from full-fibre broadband, the future-proof technology that provides the quickest and most reliable speeds for households. That figure is growing at a record rate, having increased by three million in the last year.
But there is a balance between network investment and keeping prices affordable. Companies that get the balance wrong risk losing customers to those that get it right. And all providers have a choice about when to introduce price rises.
Ofcom will continue to monitor prices closely, as we keep pressure on phone and broadband companies to ensure that people are not priced out of affordable services, and those struggling to pay their bills get the support they need. Also, we’ll soon set out plans to strengthen protections for customers in debt and those struggling to pay.