Ofcom Report Exposes Monthly Loyalty Penalty for Broadband, Landline, and TV Customers
A recent report by Ofcom, the industry watchdog, has unveiled that millions of broadband, landline, and pay-TV customers in the UK are overpaying by an average of £17 per month. This amounts to a hefty £204 annually more than necessary for those who have stayed with their providers post-contract expiration. Ofcom’s findings shed light on the stark reality that loyal customers who do not switch providers after their initial contract term ends often face significantly higher charges compared to new customers.
Additionally, the report highlighted that smaller internet and telecoms service providers tend to offer much lower prices than the major players in the industry. To empower consumers, Ofcom advised that exploring the market for better deals could result in substantial savings. The regulator noted that a substantial number of customers, 36% in the case of dual-play fixed broadband and landline customers, and 32% for triple-play fixed broadband, landline, and pay-TV customers, were out of contract as of June 2024. These customers were paying 18% and 16% more, respectively, than those still within contract terms.
Customers with broadband, landline, and pay-TV bundles who are out of contract are, on average, paying £17 more per month, while those with broadband and landline packages shell out an extra £7 monthly. Furthermore, Ofcom’s research revealed that switching to smaller providers for ultrafast broadband could result in potential savings of up to £156 annually compared to larger providers. For instance, the cost of 900 Mbit/s to 1 Gbit/s broadband services from independent full-fibre network firms started at £26 per month, significantly lower than the £39 per month charged by major providers.
In a positive trend, Ofgem found that mobile phone prices have decreased in real terms over the past year. The average price of a basket of mobile services decreased by 5% in real terms in 2024 compared to 2023 and 23% since 2019, despite a threefold increase in average data usage during the same period. The report also highlighted that prices for all SIM-only service categories decreased year on year, ranging from 1% to 11%. Customers opting for a SIM-only plan and purchasing a handset separately save around 25% or £200 compared to bundled contracts.
Comparing fixed broadband and mobile prices across six countries, the UK was found to have some of the lowest fixed broadband prices, alongside Italy. The UK also ranked as the second cheapest for standalone mobile prices, outranking France but falling below Germany, Italy, Spain, and the US. Amidst growing pressure on broadband and telecoms companies to offer support to low-income customers through discounted social tariffs, prices ranging from £12 to £23 per month for broadband and £10 to £12 per month for mobile services have been introduced. These initiatives aim to save broadband customers an average of £220 annually.
By June 2024, approximately 506,000 customers had benefited from these social tariff offers, illustrating a significant increase from the previous year. However, despite this growth, awareness of these deals remains low among consumers, with 69% of eligible broadband customers reportedly unaware of the availability of low-cost social tariffs. Ofcom has emphasised the importance of providers promoting these essential support mechanisms further.
Natalie Black, Ofcom’s Group Director for Networks and Telecoms, emphasised the competitive pricing of mobile and broadband services in the UK, underscoring the opportunities for significant savings, especially on faster packages. Black also praised the increasing uptake of social tariffs but stressed the need for improved awareness among eligible customers. She urged communication providers to intensify efforts in promoting these crucial support schemes, ensuring that all consumers can benefit from accessible and affordable services in the telecommunications sector.