Record 8m households in UK struggle to manage telecoms bills, says Ofcom

Regulator calls on sector’s big players to scrap formula that uses inflation plus 3.9% to set annual price rises

A record 8 million UK households are facing problems paying their mobile, broadband, pay-TV and streaming bills, prompting the media regulator to call on the biggest telecoms companies to reconsider the inflation-busting price rises planned for the spring.

Ofcom found in its annual affordability survey that one in seven families have cut back spending in other areas, such as on food and clothing, to afford their communication services, while 9% have cancelled a service.

The number of families struggling to manage their telecoms bills has doubled over the last year – from 15% to 29% of customers nationwide – the highest level the regulator has recorded.

Given the situation is expected to worsen amid the cost of living crisis, Ofcom called on telecoms providers to scrap the formula used for annual price rises in April. The mechanism – used in some form by many providers including BT, TalkTalk, Shell Energy and Vodafone – increases bills by the rate of inflation in January as measured using the consumer prices index, plus 3.9%.

“The cost of living crisis is putting unprecedented strain in household budgets,” said Lindsey Fussell, Ofcom’s networks and communications group director. “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.”

Ofcom named and shamed a range of telecoms companies for not offering “low-cost” social tariffs, and said people moving on to one should not be charged hefty early termination charges.

The regulator called on EE, Vodafone, TalkTalk, Shell Energy and Plusnet to launch social tariffs across the broadband packages they offer. In terms of mobile packages, according to Ofcom, only Vodafone has launched a social tariff, called Voxi.

Ofcom also criticised those that do offer social tariffs for not promoting them online or advertising them broadly, with almost 70% of eligible customers unaware such tariffs exist.

Take-up of broadband social tariffs has more than doubled in the past six months, from 55,000 to 136,000 customers, but this is just 3% of all eligible households.

Ofcom also updated guidance on how telecoms companies should support customers either in debt or struggling to pay bills.

“Restricting the services of someone who is particularly reliant on them, to push them into paying outstanding bills, should be avoided or limited,” said Ofcom. “Disconnection should only ever be used as a last resort.”

The regulator said as well as offering social tariffs to struggling customers, telecoms companies should use a range of channels – letters, email, phone and text – to maximise the chances of reaching customers in debt to offer support.

“It is essential the industry puts its customers first and focuses on what more it can do to help support them,” said Fussell.

In June, the UK’s biggest mobile and broadband companies agreed a plan at a government-led summit to help customers struggling to pay bills

Last month, the consumer group Which? estimated that 5.7 million households faced at least one “affordability issue”, such as missing a payment or having to cancel or change a service, with their mobile, landline or broadband service in April.

Contributor

Mark Sweney

The GuardianTramp

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