Millions of low-income broadband customers will be stuck between a rock and a hard place after April price hikes, Which? warns

Which? is calling on telecoms firms to urgently cancel 2023 mid-contract price hikes for financially vulnerable customers, as new research finds millions of low-income broadband customers will be left stuck between a rock and a hard place when prices are hiked in April.

Every April, many broadband firms – such as BT, EE, Plusnet, TalkTalk and Vodafone – raise prices in line with the Consumer Price Index (CPI) plus an additional 3 to 3.9 per cent. As these price rises are often applied mid-contract, people either have to accept these eye-watering increases or pay costly exit fees to leave their contract early.

This year, some broadband firms will be pushing ahead with price hikes of over 14 per cent. However, Which? believes they must cancel 2023 hikes for financially vulnerable consumers and allow all customers to leave without penalty if they face mid-contract price rises. It is completely unacceptable that during an unprecedented cost of living crisis, telecoms firms are profiting from those who can least afford it.

Vodafone has confirmed it is automatically exempting customers that it has identified as financially vulnerable from this year’s price rises. This is an important step in the right direction and Which? is calling on all other providers to make the same commitment.

Based on the average amounts paid by low-income customers in Which?’s latest broadband survey, the consumer champion has calculated how much a low-income BT, EE, Plusnet, TalkTalk or Vodafone customer – earning £21,000 or less a year – could see their payments rise by.

Low-income customers could see a potential price increase of up to £77 per year. On average, they would face price hikes of £52 a year and pay £431 a year for their broadband – at least 2 per cent of their annual income.

As BT has the highest monthly prices of the companies Which? looked at, their customers could see the largest annual increase of £58.20 after this year’s price hikes of over 14 per cent are applied. This is closely followed by EE and TalkTalk customers who could see an annual price increase of £51.84 and £49.44 respectively. Plusnet customers could face price hikes of £48.43 and Vodafone customers would see the lowest price hikes of £44.93.

Low-income BT customers could also face the highest exit fees of £194.34 if they wanted to leave a year early. This is closely followed by Plusnet, TalkTalk and EE customers who could face exit fees of £133.12, £122.40 and £116.63 respectively. Vodafone customers could face the lowest exit fees of £101.31 for leaving their contract a year early.

TalkTalk has said it will automatically exempt its most financially vulnerable customers – but did not explain its criteria for assessing this or how it would be publicised.

41-year-old John Walton from Bristol began a new contract with EE in January. He shopped around and although it was more expensive than his previous contract, it seemed like the best value option available. He then received an email stating that from the 31st March, his bill would be going up by over 14 per cent – meaning he would now be paying an extra £5.76 a month for his broadband.

John said: “I’m on a limited budget and did lots of shopping around for the best deal. It’s so infuriating to have done that work, been told a price, and then to see prices hiked such a huge amount. At a time when everyone’s struggling, it just feels like a slap in the face.”

Providers know that for financially vulnerable customers, mid-contract price rises are potentially devastating – which is why their social tariffs offer fixed prices that are exempt from annual rises.

Which? research shows that the average low-income customer affected by the price rise could save as much as £220.32 – £18.36 per month – by switching to a social tariff.

BT customers would make the biggest annual saving of £260.16 (£21.68 a month) by switching to a social tariff. Vodafone customers would make the lowest savings of £168 a year (£14 a month).

But with just weeks to go before record high price hikes on broadband and mobile, take up of social tariffs is still incredibly low – largely due to a lack of awareness. According to the consumer champion’s most recent broadband survey, three-quarters of low-income consumers are unaware of social tariffs.

Previous Which? research found that even when customers know about these discounted rates, they may feel unable to switch for contractual reasons – for example, if they would need to break their contract to move to another provider’s social tariff – or they may choose not to switch due to worries about broadband speeds.

That means millions of financially vulnerable customers, struggling to make ends meet, are unprotected from the exorbitant hikes providers have announced.

Rocio Concha, Which? Director of Policy and Advocacy, 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.”

ENDS

Notes to editors 

Which? cost of living campaign

The consumer champion recently launched a campaign calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis.

As part of this, Which? is calling for 2023 mid-contract price rises to be cancelled for financially vulnerable consumers. This should apply to those consumers known to providers and all those who are eligible for social tariffs, but have not yet taken one. Providers should work with the government and Ofcom to identify these customers using all data available to them.

Read more about the campaign here and more about Which?’s calls on businesses here.

Research

Based on the average amounts paid in a December 2022/January 2023 survey of 2773 customers – 38 per cent of which are low-income – who had a contract for a home broadband service (including broadband and phone). Data includes a nationally representative sample plus a provider boost approach for brands with low sample sizes.

Which? defines low-income as below £21,000. This is according to the government definition that households are classed as being in low income if they live on less than 60 per cent of the median net disposable equivalised UK household income. Median annual income in 2022 was £32,300.

Shell Energy Broadband also employs mid-contract price rises (CPI plus up to 3 per cent). Which? has excluded it from this analysis due to low sample size.

Average amount low-income customers pay and annual increases

Exit fees and social tariffs

*TalkTalk operates a fixed model – the majority of its deals have a £10.20pm termination fee so Which? has used that here.

**Comparing against the cheapest widely-available social tariff – Vodafone Essentials Broadband which costs £12pm

The average low income customer affected by the price rise could save as much as £18.36 per month (£220.32 per year) by switching to a social tariff.

To calculate the exit fees payable for broadband consumers, Which? took a hypothetical consumer who has 12 months remaining on their contract at the point where prices are set to rise. This makes the figures for annual price increases and exit fees comparable.

Calculations for BT, EE, Plusnet, Vodafone are all based around exit fees faced by a customer paying the average amount as per our nationally representative survey. For these companies, Which? followed the example calculation for early termination charges displayed on their website, which is:

• Price paid per month x number of months remaining

• Remove VAT

• Subtract business cost savings

• Subtract discount for early payment

• Apply VAT

To get representative figures, Which? substituted in our average price paid per provider, and scaled the business cost savings deducted according to the difference between this price and the example price.

TalkTalk has fixed exit fees which were calculated for a customer with 12 months remaining at the point where prices rise. TalkTalk charges £10.20 per remaining month for the majority of tariffs.

Which?’s top tips for consumers who are facing mid-contract price hikes

If you’re struggling to pay your bills, speak to your broadband, landline or mobile phone provider. The major telecoms providers have all agreed to better support customers during the cost of living crisis.

Certain customers are also eligible for special discounted broadband deals, so read our guide to broadband social tariffs to find out more.

Rights of replies

An EE spokesperson said: “Mr Walton was informed about the upcoming price increase and agreed to this change when he upgraded his contract over the phone.

“Customers who are struggling financially and are eligible for Home Essentials can move penalty free at any point in their contract, this also includes EE and Plusnet customers.

“We understand that price rises are never wanted nor welcomed, but recognise them as a necessary thing to do given the rising costs our business faces

“With the average price increase just above £1 per week, and over 3 million of our customers exempt from the rise – we’re also doing all we can to ensure our services are accessible to the widest group of customers possible through our market leading social tariffs.”

EE, Plusnet and BT are all part of the BT Group.

A TalkTalk spokesperson said: “This regulated CPI-linked price rise is preventable. There is still time for Ofcom to act and reduce the wholesale price increases that lead to these price rises. These are exceptional circumstances, and families and businesses across the UK need the regulator to act.”

Vodafone declined to comment on the research.

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at endorsementscheme@which.co.uk.

Press Release: broadband, Cost of living, Rocio Concha