New Ofcom research reveals the challenges and tough choices many telecoms customers are facing this year, with more action needed from industry to support customers in financial difficulty.
Nearly one in five households (19%) – around 4.7 million homes – struggle to afford their telecoms services, our research found. Six per cent have difficulties paying for their fixed home broadband, while 5% struggle with their mobile bill.
When struggling to pay for a service, the most common action taken by customers is to cut back on a package to make it more affordable – something 11% of households say they have done. Other steps include reducing spend on other items such as food and clothes (5%), cancelling a service (4%), missing a payment (2%) or changing payment method (2%).
Data from providers indicates that the proportion of customers in arrears was relatively stable between January and September (2% for broadband and 3% for mobile).
While the proportion of customers disconnected for non-payment fell during the initial lockdown period, there was an increase between June and September, to higher levels than before the pandemic.
The broadband and mobile markets offer customers a wide range of choice, with different deals available to suit different needs. For example, superfast broadband is available from under £25 a month, but people can also choose to pay more for a faster service.
But people suffering financial hardship can struggle with their bills. Some broadband providers – such as BT, KCOM and Virgin Media – offer cheaper tariffs to help customers on low incomes, but relatively few customers have taken up one of these targeted affordable options.
Providers can do more
We welcome the swift action taken by providers in response to the pandemic, but there is more they can do to support their customers.
We want firms that do not already offer a targeted affordable tariff for customers on low incomes to consider doing so. Providers that do offer such packages should do more to promote them, to try and raise awareness among customers who are likely to be eligible.
We also recently called on providers to revisit their debt and disconnection practices, to ensure sufficient support is offered to customers who may be struggling to pay their bills.
Lindsey Fussell, Ofcom’s Networks and Communications Group Director, said: “Lockdown has laid bare our dependence on a reliable internet connection. So it’s important that affordable options are available so everyone can stay connected – particularly those who have fallen on hard times.
“And while we welcome the support companies have provided customers this year, some people continue to face challenges and it’s clear providers can do more to support customers who are in financial difficulty.”
Given the issues raised by our research, and the challenging economic outlook, we will carry out further research – and publish another report – on affordability and debt next year.
Should providers not address our concerns through their current levels of support to customers in financial difficulty, we will consider further action.
This could include working with the Government to determine whether an industry-wide regulated social tariff is necessary.
From 21 December 2020, the UK Government’s legislation to implement the European Electronic Communications Code will give Ofcom the power to impose social tariffs on all providers where needed to help the most vulnerable.
However, that power can only be exercised following a direction from the Secretary of State to Ofcom to review the affordability of relevant services, and subsequent approval by the Secretary of State of Ofcom’s recommendations.