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Broadband: Price

Volume 827: debated on Thursday 2 February 2023


Asked by

To ask His Majesty’s Government what plans they have, if any, to prevent internet providers from increasing the price of broadband connections by up to 3.9 per cent above the Consumer Price Index measure of inflation.

My Lords, this is clearly a difficult time for households across the country that are struggling to pay their bills as a result of the global rise in the cost of living. While operators are continuing to invest in gigabit-capable services, the UK benefits from some of the cheapest retail pricing of broadband in Europe, with only around 4% of a typical household’s monthly budget going on telecommunications services. However, we understand the challenges many families are facing at the moment, so we are calling on operators to consider carefully the need for above-inflation price increases and the impact they may have on people across the country.

My Lords, there is absolutely no justification for the inflation-busting 14% price rise for broadband. BT, EE, PlusNet, Shell Energy, TalkTalk and Vodafone are acting in unison; they have trapped millions of people into 18- to 24-month contracts and are forcing them to pay 14% more, mid-term. Those wanting to leave are being forced to pay a £200 exit fee. I ask the Minister, first, to ban mid-term contract price hikes and, secondly, to change the law so that customers can exit free from any broadband contract longer than 12 months.

The Government believe it is important that consumers are fully aware of the clauses in their contracts so that they are empowered to make informed decisions, but we also are mindful of the impact on families at this time. That is why my right honourable friend the Secretary of State earlier this month met chief executives from major broadband and mobile providers and asked them to consider very carefully the need to make above-inflation price increases at this moment. Households struggling to afford telecoms services should speak to their provider. Social tariffs are available, as we heard in a Question earlier this week, but also, since last July, providers have committed to support any customers struggling to pay their bills.

My Lords, is this not an opportunity for the Government, in rolling out their digital programme, to ensure that this area is properly regulated? Could Ofcom not play a crucial role here? All of us are bound by our contracts, as my noble friend the Minister rightly pointed out, which in most cases are locked in for 24 months, and we are going to face an average 11% increase. For vulnerable households, this is just too much.

Ofcom does have an important role to play here as the independent regulator, but, as I say, mindful of the particular challenges that households are facing, my right honourable friend the Secretary of State spoke directly to companies, asking them to consider very carefully the decisions they are making and the impact on their customers.

My Lords, was the Minister struck, as I was, by the observation in Ofcom’s December pricing trends report that there are millions of consumers who are out of contract, and so free to switch, but have not yet done so? Does he agree that these people could make significant savings, often without having to switch at all, as many providers will drop their prices as soon as you ring and threaten to leave? What are the Government doing to make this group aware that they can do this?

Yes, it is very striking. Many people could be saving money and are not aware of it. That is why it is important that contracts are clear, but it also highlights the importance of consumer advice groups and, indeed, debates such as this, to draw the attention of people to the contracts they have signed.

My Lords, of course everybody should read the contracts they sign, but has the Minister read his broadband provider’s contract? These contracts are impossible to understand. They have subcontracts and other regulations—there is no possibility that people will understand the contracts that they have to sign if they want broadband. What my noble friend describes is anti-competitive, inflationary and likely to drive down digital inclusion. This is a matter for the Competition and Markets Authority. The Minister should think about referring this to the Competition and Markets Authority for profiteering and setting up a cartel.

At the risk of sounding like a geek, I have read my contract. I did so because some operators permit their customers to exit their contracts penalty-free when there is a price rise. Mine did; I looked at it, I shopped around and I saved some money. People would be well advised to do the same, but it is important that the industry tells people about the decisions it makes. That is why the Secretary of State brought chief executives in and asked them to consider carefully the impact of the decisions they make and how they communicate them.

Has my noble friend, as well as having the experience of reading a contract, had the experience of trying to communicate with these providers? You sit on the phone for hours and hours and then get passed from pillar to post. Can we do something to make sure that their customer relations are rather more efficient?

On that, my experience was indeed a bit more painful. It is obviously for commercial providers to decide how they provide services to their customers in a way that allows them to keep costs down and keep bills down while satisfying people so that they want to stay with them.

My Lords, there is a pattern here. The Government are keeping down wages for our heroes in the public sector, such as teachers, nurses and firefighters, but at the same time, they are doing nothing to curb the profiteering by energy, broadband and other companies, even though, as my noble friend just said, this is inflationary. Can the Minister explain the double standards that they are operating?

My Lords, the action we are taking is to beat the evil of inflation, which is what lies behind these price rises. At the same time, we have acted quickly to support families, through such things as the energy price guarantee and the energy bills support scheme, as well as further help for the most vulnerable households of up to £200.

My Lords, will the Minister comment on the problems faced by vulnerable older people who might just have started trying to get tech-enabled and just signed up for a broadband contract? They do not understand how these things work, then are suddenly faced with a penalty if they try to change to a better rate and are locked into a contract that was never properly explained to them.

In July last year, the previous Secretary of State also spoke to mobile and broadband suppliers and secured a list of commitments from them, including a commitment to support their customers who may be struggling with the cost of living and to treat them with compassion and understanding. All providers committed to support customers who are struggling with their bills, offering them ways to keep connected, including allowing them to move to cheaper packages without charge or penalty, or agreeing manageable payment plans.

To revert to a question asked previously by a noble Lord, is this not a matter that should be referred to the Competition and Markets Authority?

At the moment we are pleased to have seen the commitments made by the companies following their meetings with the Secretary of State and her predecessor. We will keep it under review.

My Lords, earlier this week your Lordships’ House discussed the Government’s efforts to ensure that eligible households are aware of social tariffs for broadband, which the Minister referred to. I asked the Minister whether the Government would contact benefit claimants directly, given that their data is available to the Government, and in response the Minister cited a more general information campaign of adverts and leaflets. I ask the Minister today whether consideration has been given to contacting claimants directly so that households know that these special tariffs are ones for which they are eligible?

We are advertising the support which is available generally. The social tariffs are available to people who are in receipt of universal credit and other means-tested benefits, but there is help for anyone who may be struggling to pay their bills, thanks to the commitments we secured from the industry last July. That is why we are advertising all of the help generally, through the Help for Households campaign, but of course that is being monitored for its success in getting the message out, and all ideas are welcome.

My Lords, BT businesses are operated under a special government regulation through Ofcom. In view of the fact that throughout rural areas in the UK, BT Openreach is providing broadband connections at highly difficult and challenging costs for many consumers, will the Minister, as a result of today’s questions, talk directly to BT Openreach about reducing its costs and ensuring that infrastructure issues are better dealt with, including wayleave permissions, because many people in rural communities cannot access the broadband they require to undertake their work?

As the noble Baroness notes, Openreach’s prices are fixed by Ofcom as part of its five-year wholesale fixed telecoms market review and have been allowed to increase by CPI to reflect the significant additional costs faced when deploying new infrastructure. Our £5 billion Project Gigabit programme is delivering lightning fast and reliable broadband to hard-to-reach areas right across the UK, as the noble Baroness says. That funding is available to a range of suppliers; where infrastructure is built using public subsidy, suppliers must make their networks available for use by other operators so that everybody can benefit.