Consumer watchdog Which? is urging broadband firms to cancel “exorbitant” mid-contract price hikes for vulnerable customers less than two weeks before they are due to take effect. Millions of broadband and mobile phone customers can expect to see monthly bill increases of at least 14 per cent from April.
Providers often link their annual price rises to January’s consumer price index (CPI) or the retail price index (RPI), which were 10.5 per cent and 13.4 per cent respectively. BT, EE, Plusnet and Vodafone broadband contracts allow prices to go up by CPI plus 3.9 per cent.
At TalkTalk, it is CPI plus 3.7 per cent, while Shell Energy can add CPI plus 3 per cent. Sky and Virgin Media contracts allow mid-contract price increases but they do not stipulate a pricing formula in the same way as rivals.
BT has confirmed an increase this year of 14.4 per cent - CPI of 10.5 per cent plus 3.9 per cent. Vodafone has confirmed it is automatically exempting customers that it has identified as financially vulnerable from this year’s price rises.
Which? is calling on telecoms firms to “urgently” cancel the hikes for their most financially vulnerable households and allow all customers to leave without penalty if they face mid-contract price rises.
The watchdog said it was “completely unacceptable that during an unprecedented cost of living crisis, telecoms firms are profiting from those who can least afford it”. Which? calculated that low-income BT, EE, Plusnet, TalkTalk or Vodafone customers - earning £21,000 or less a year - could see their payments rise by up to £77 a year or an average of £52, paying £431 a year for their broadband or at least two per cent of their annual income.
Low-income BT customers could also face the highest exit fees of £194.34 if they wanted to leave a year early, closely followed by Plusnet, TalkTalk and EE customers who could face exit fees of £133.12, £122.40 and £116.63 respectively. TalkTalk has said it will automatically exempt its most financially vulnerable customers but has not specified its criteria for this.
Providers offer social tariffs with fixed prices that are exempt from annual rises. Which? said the average low-income customer affected by the price rise could save as much as £220.32 - or £18.36 per month - by switching to a social tariff.
But with less than a fortnight to go before the price rises take effect, take-up of social tariffs is still low - largely due to a lack of awareness, the consumer group said. According to its most recent broadband survey, three quarters of low-income consumers are unaware of social tariffs.
Which? director of policy and advocacy Rocio Concha said: “With less than two weeks to go until April price increases take effect, it’s hugely concerning that some providers have not taken action to protect financially vulnerable consumers from these hard to justify above-inflation price hikes.
“Telecoms providers must urgently cancel the 2023 price hikes for financially vulnerable customers. They should work to proactively identify these customers and ensure they’re not financially penalised, even if they don’t take up a social tariff.”
An Ofcom spokesman said: “Providers - like all businesses - face a range of cost rises. Wholesale costs are just one of these. Ofcom limits some of Openreach’s wholesale price rises to inflation. It’s entirely up to providers whether they choose to increase their prices, and not all of them do.
“While Ofcom doesn’t set retail prices, inflation-linked price rises can be unclear and unpredictable, and we’re concerned that providers are making it difficult for customers to know what to expect. So we’re taking a thorough look at these types of contract terms to see whether tougher protections are needed.”
The latest figures from Ofcom show that just 136,000 households on Universal Credit who are entitled to the discounted deals have taken them up. A new system put in place last year makes it quicker for broadband providers' to check eligibility by accessing a special Department for Work and Pensions (DWP) IT system - with the claimant's permission.
Benefits that the DWP’s system will be able to verify entitlement for are:
- Universal Credit
- Pension Credit
- Income Support
- Income-Based Jobseeker’s Allowance
- Income-Related Employment Support Allowance
Social tariff broadband packages
People in receipt of benefits interested in exploring broadband tariff options can find a full list on Ofcom’s website here.
Here are 10 to give you an idea of monthly costs, speeds available and eligibility. It’s important to note that each company has its own list of eligible benefits, but all include Universal Credit.
Other benefits may include Pension Credit, Job Seekers’ Allowance, Employment and Support Allowance, Income Support, Personal Independence Payment, Attendance Allowance, and Care Leavers’ Support.
Social tariff broadband deals
BT Home Essentials
- Monthly cost: £15
- Average broadband speed: around 36mbps
- Eligibility: various benefits (in and out of work)
BT Home Essentials 2
- Monthly cost: £20
- Average broadband speed: around 67mbps
- Eligibility: various benefits (in and out of work)
EE Basic
- Monthly cost: £12
- Average broadband speed: up to 25Mbps
- Eligibility: various benefits (in and out of work)
Lothian Broadband Social Tariff
- Monthly cost: £19.99
- Average broadband speed: 100 Mbps
- Eligibility: open to all
Sky Broadband Basics
- Monthly cost: £20
- Average broadband speed: 36Mbps
- Eligibility: Universal Credit or Pension Credit
NOW Broadband Basics
- Monthly cost: £20
- Average broadband speed: 36Mbps
- Eligibility: Universal Credit or Pension Credit
Virgin Media Essential Broadband
- Monthly cost: £12.50
- Average broadband speed: 15Mbps
- Eligibility: Universal Credit
Virgin Media Essential Broadband Plus
- Monthly cost: £20
- Average broadband speed: 54Mbps
- Eligibility: Universal Credit
Vodafone Essentials Broadband
- Monthly cost: £12
- Average broadband speed: 36Mbps
- Eligibility: various benefits (in and out of work)
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