Social tariffs on broadband

Please see below a template press release calling on the government to require broadband providers to provide cheaper tariffs to vulnerable consumers.


[TEMPLATE]: Social tariffs on broadband

Dear all,

Please see below a template press release calling on the government to require broadband providers to provide cheaper tariffs to vulnerable consumers. This is based on a proposal by Liberal Democrat MP Jamie Stone, see story in The i: Broadband: Seven million low-income households are missing out on cheaper internet, warns new research

This template can be used in England, Scotland and Wales.

Please use this data sheet [COLUMN F] from the House of Commons Library to find your constituency and insert the total number of households who could benefit from the Government enforcing providers to introduce social tariffs. This is equivalent to the number of households in receipt of any benefits.

[INSERT COLUMN F] low income households in [INSERT AREA] paying over the odds for their broadband as Government fails to act

[INSERT COLUMN F] low income households in [INSERT AREA] are paying too much for their broadband because the Government has not forced providers to offer cheaper tariffs, an analysis by the Liberal Democrats has found.

So-called ‘social tariffs’, which typically offer broadband access between £10 and £20 a month, are only currently offered by some providers. But changes to the law that came into force last year mean that the Government now has the ability to force broadband providers to offer these cheaper deals.

The Liberal Democrats are calling on the Government to offer relief to families facing a cost of living crisis, by forcing broadband providers to offer cheaper deals to vulnerable consumers in [INSERT AREA].

Research by the House of Commons Library suggests that [INSERT COLUMN F] households in [INSERT AREA] could see a reduction in their bills under the Liberal Democrat proposals. These households are among the seven million across the country that are currently missing out on cheaper internet access.

[NAME], Liberal Democrat Spokesperson for [INSERT AREA], said:

“Some of the most vulnerable consumers in [INSERT AREA] are bracing themselves for a cost of living crisis, with energy bills soaring through the roof, a slash to Universal Credit and unfair Tory tax hikes leaving everyone feeling the squeeze.

“A reduction in broadband bills could be the breathing space families in [INSERT AREA] need this winter. Instead this Conservative Government is instead choosing to sit on its hands and leave thousands here paying over the odds.”

Liberal Democrat Spokesperson for Digital, Culture, Media and Sport, Jamie Stone MP, said:

“Access to broadband is vital for learning, for work, and for staying connected. The Liberal Democrats think the very least the Government can do is offer the lifeline of social tariffs to anyone who needs it.”

ENDS

Notes to Editors

Please see House of Commons Library Research as below. Further information can be found in Chapter 2.2 of this House of Commons Research briefing: Telecoms: fairness and protection for consumers

Breakdown by constituency.

The number of extra households that would save money from a cheaper social tariff would depend on how the eligibility criteria is set. Research by the House of Commons Library finds that if households in receipt of any benefits were to be eligible, then [INSERT COLUMN F] households in [INSERT AREA] would see a reduction in their bills.

Social tariffs

You asked questions about broadband social tariffs.

In short, Ofcom’s new powers regarding social tariffs are contained in the Communications Act 2003, primarily Sections 72D-I. The Secretary of State must first direct Ofcom to review the affordability of particular services specifically with a view to considering whether a social tariff should be implemented. Ofcom may make recommendations and the Secretary of State may then direct Ofcom to implement the recommendations. A social tariff condition, if implemented, would be separate from the General Conditions.

What were the amendments made that gave Ofcom powers to introduce mandatory industry-wide tariffs?

The amendments were to the Communications Act 2003 (‘the Act’). They were made by the Electronic Communications And Wireless Telegraphy (Amendment) (European Electronic Communications Code And Eu Exit) Regulations 2020 (SI1419/2020) (‘the Regulations’).

The Regulations implemented into UK law parts of the European Electronic Communications Code (EECC) (see Box 1 below).

The main new sections regarding social tariffs in the Communications Act are Sections 72D-I (along with consequential amendments elsewhere). The Regulations also added a new specific duty for Ofcom to review consumer tariffs in general (section 72C of the Act).

Section 72D sets out the procedure for a mandatory social tariff requirement to be introduced. The Secretary of State must first direct Ofcom to review the affordability of particular services specifically with a view to considering whether a social tariff condition should be implemented. Ofcom may make recommendations in their report. The Government may then direct Ofcom to implement any of its recommendations.

Further information is provided in the Explanatory Memorandum to the Regulations, and in paragraph 2.6 of Ofcom’s July 2021 report, Affordability of communications services. Ofcom’s July 2021 report explained that the Government currently preferred a voluntary approach:

2.7 The Government’s current position is to encourage providers to introduce targeted tariffs on a voluntary basis, rather than directing Ofcom to review the affordability of relevant services with a view to imposing regulatory social tariffs on all providers. However, the Government continues to monitor the situation closely.

The most recent Parliamentary question on this topic (September 2021) addressed what recent discussions the Secretary of State has had with Ofcom on progress towards securing cheaper broadband tariffs for low income households:

In the past six months, DCMS - working with Ofcom - have convened two Ministerial roundtables with senior representatives of Internet Service Providers (ISPs) to discuss affordability and encourage the introduction of fixed broadband social tariffs for low-income households.

Following our engagement with the sector, a range of broadband social tariff packages are now available in the market to support those on low incomes or who receive specific benefits. BT, for example, recently announced a Home Essentials package to launch which will provide fibre and voice services to households in receipt of Universal Credit and certain other means-tested benefits for £15 per month. Virgin, Hyperoptic and other providers are also offering similar packages to assist on low incomes. Between them, these products are available to 99% of households across the country.

The government, together with Ofcom, continues to encourage all fixed-line providers to introduce a social tariff offer so as to ensure those on low incomes have affordable access to services and information.

1 European Electronic Communications Code (EECC)

The European Electronic Communications Code (EECC) – Directive (EU) 2018/1972) – was published in the Official Journal of the European Union in December 2018 with an implementation date for Member States of 21 December 2020. The UK was required to implement the Directive into domestic law under the EU Withdrawal Agreement, because the implementation date fell within the transition period.

The EECC sets out a new EU telecommunications framework. It covers a range of different telecoms areas such as radio spectrum use, network regulation, universal broadband service and consumer contracts. It combines and revises four existing Directives into a single framework and adds some new provisions.

The European Parliament Research Service published a briefing paper on the EECC in January 2019 that provides further information. Law firm Squire Patton Boggs published a short 2-page explainer document that may also be helpful for a quick overview: Five Minutes On… The EU Electronic Communications Code

Secondly, if we were to call on the Government to push Ofcom to make social tariffs mandatory, would be calling for Ofcom to change its General Conditions?

Not quite. A social tariff condition, if implemented, would be separate from the General Conditions.

Section 45 of the Communications Act (as amended) sets out Ofcom’s powers to set conditions (i.e. legal requirements on one or more telecoms companies):

45 Power of OFCOM to set conditions

(1) OFCOM shall have the power to set conditions under this section binding the persons to whom they are applied in accordance with section 46.

(2)A condition set by OFCOM under this section must be either—

(a)a general condition; or

(b)a condition of one of the following descriptions—

(i) a universal service condition;

[F1(ia) a social tariff condition;]

(ii)an access-related condition;

(iii)a privileged supplier condition;

(iv)a significant market power condition (an “SMP condition”).

(3)…

A general condition must apply to all communications providers and can only relate to specific things (those set out in sections 51, 52, 57, 58 or 64 of the Act).

The power to set a social tariff condition is separate. This means there it has a different procedures and requirements of what the condition can include (as set out in my answer above).

Prior to the EECC amendments Ofcom only had power to set a mandatory social tariff requirement in relation to a universal service order. I mentioned the Universal Service Obligation for Broadband when we met last week, so for example, Ofcom could have set a social tariff requirement on BT and KCOM as part of the USO (this is discussed briefly in the USO briefing I sent previously). The EECC amendments change this so now, Ofcom can only in “exceptional circumstances” set social tariff conditions on a specific individual provider.

How many extra households would save money / benefit if broadband social tariffs were made mandatory?

The number of extra households that would save money from a social tariff would depend on how the eligibility criteria is set. There are a number of different options, for example, households in receipt of employment-based benefits (such as Jobseeker’s Allowance), or a broader range of benefits (such as Universal Credit or Personal Independence Payment). Ofcom’s July 2021 report on Affordability of communications services (PDF) includes a discussion of the different eligibility conditions currently used in the market, see pages 7-8 and 32-33.

The report included the following estimates on page 32 for the number of households that would fall into different broad eligibility conditions.

Source: Ofcom estimates based on analysis of OBR/DWP data
Eligibility Size of group
Out of work benefits 4 million households
All means-tested benefits 7 million households 
All benefits More than 7 million households

Ofcom estimates based on analysis of OBR/DWP data

We may be able to provide more precise figures for the number of households would benefit from a particular eligibility condition. If this would be helpful, let us know the particular eligibility measure that you are interested in. You may also be interested in our constituency data dashboards that will show you the number of households falling within some of these categories in your constituency, for example, people claiming unemployment benefits and Personal Independence Payment.

The number of households that benefit would also ultimately depend on how many households take-up any such tariff. Ofcom’s research indicates that the number of households that choose these services is currently low, so it is encouraging providers to actively promote their social tariff offers to relevant customers.