Ofcom Urges ISPs Not To Raise Broadband Prices

Ofcom Urges ISPs Not To Raise Broadband Prices

Ofcom, the telecom regulator of the United Kingdom, recently released their annual broadband affordability study. Among other findings, the study identified that the number of customers who are struggling to pay for their phone, broadband and TV bills had risen to 29%, which is the highest level ever recorded.

In the face of this increasing pressure on consumers, the regulator issued a statement advising operators to consider delaying further price raises on British households. Given the overarching inflationary environment facing consumers, Ofcom cautioned ISP to “think very carefully about whether significant price rises can be justified.”

Additionally, the regulator also urged providers to offer more low-cost plans, and to expend more effort promoting them, as “70% of eligible customers are not aware” that such plans are even available to them.

Tarifica’s Take

Some of the pressure in the UK is likely driven by the specific regulatory rule of that market, which allow operators an annual price raise for customers that are locked into contracts, provided that these increases do not exceed the country’s CPI. These price raises almost invariably spark backlash and, given this year’s CPI is the highest in many years, the country’s upcoming price raises will likely draw even more scrutiny than usual.

That said, this backlash against price increases is not limited to the UK. In the face of global inflation and economic instability, consumers are facing a dual threat of rising prices and increasing uncertainty. These frustrations are particularly acute for “essential” services like mobile phones and broadband internet connectivity.

It should be noted, this environment is not only impacting consumers. Operators are facing stretched supply chains, raise requests from vendors and staff, and numerous other similar factors driving up internal costs. It is understandable that operators would push to pass these increased costs on to consumers.

As urged by Ofcom in its letter, operators would be wise to delay any price increases as long as possible. What often starts as critical studies and editorials can rapidly transition to physical protests and even new legislation or regulation. In markets around the globe, there are growing calls for government interventions to limit price increases or enact other restrictions on operators. One only need look at the 2019 #DataMustFall campaign in South Africa to observe the consequences of these kinds of consumer movements. This monthslong protest to high mobile prices ultimately led to the country’s competition regulator mandating significant price cuts on data. Given the current state of global markets, telecom providers would be well served to avoid becoming a target of irate consumers and politicians.