BT has claimed that the telecoms industry cannot afford an estimated potential annual loss of up to £2bn providing low-cost broadband to millions of the UK’s most financially pressured households, but critics have said they have an obligation to do so.
Marc Allera, the chief executive of BT’s consumer division, which includes the mobile company EE, said the industry needed government support to help cover the ongoing cost of providing cheap tariffs, the same way households have been helped with energy bills.
BT estimates it would cost the industry up to £2bn if the potentially 6 million recipients eligible to be on social tariffs took them up, and is expected to lobby for state support when it meets officials from the Department for Digital, Culture, Media and Sport (DCMS) on Thursday.
However, critics believe that telecoms companies such as BT – which made a £1.9bn profit last year and is now locked in a protracted battle with striking workers over pay – have an obligation to pay and can afford it.
“For those most in need who are struggling to keep up with their bills, social tariffs are a right, not a privilege,” said Ernest Doku, a telecoms expert at Uswitch. “Broadband is an essential service and, at a time when some households are under huge financial strain, companies have a social responsibility to help keep their customers connected.”
A typical BT broadband customer pays about £35 a month, whereas a social broadband tariff drops to about £15, so eligible customers switching to a cheaper tariff or new customers signing up to one effectively lose a telecoms company about £20 a month.
The telecoms regulator, Ofcom, which has criticised some companies for not offering social tariffs and the industry as a whole for failing to promote them to customers, says only 136,000 households have taken a social tariff from providers including BT, Vodafone, Sky and Virgin Media.
So far BT has provided more than 85% of social tariffs in the market.
“We feel the model in its current form is unsustainable, especially with the numbers [of sign ups] the government is wanting to drive,” said Allera.
“We are asking to work more closely with government on what can be done to overcome this, and whether we should look to introduce greater central funding, like in the energy market, to help those that need it the most.”
Telecoms bosses are to meet Julia Lopez, the media, data and digital infrastructure minister at the DCMS, on Thursday, to discuss the provision and uptake of social tariffs.
They will lobby for some form of government-backed mechanism, just as the energy price guarantee or winter fuel allowance have been introduced to help homes facing soaring energy costs, arguing that shouldering an annual increase in costs of potentially billions over a period of years is unsustainable.
The telecoms industry argues it is investing billions in rolling out 5G and full-fibre broadband infrastructure, but will only see gradual returns on that over decades, as well as facing hundreds of millions of pounds increases in energy and wage bills.
“Companies should be focused on expanding and promoting these tariffs more widely, boosting awareness and honouring the commitments they made as part of the government’s action plan back in the summer,” said Doku.
Bosses will also face a grilling over the practice of instituting mid-contract broadband and mobile bill increases, which will see bills rise by potentially as much as 15% next spring, boosting industry revenues by billions.
Companies including BT and Vodafone have said they will continue to use a mechanism to raise prices annually by the rate of inflation as measured by the consumer prices index (CPI) in January, plus 3.9%.
With inflation running at a 41-year high, this means customers signing up for a new two-year contract offered in some deals currently available over the Christmas period could find themselves paying up to £240 more than they thought.
