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Millions of low-income households could be overpaying for broadband

Wednesday, March 22nd 2017 by Phil Wilkinson-Jones

Millions of households could be overpaying for phone and broadband services by not signing up to a social tariff, according to an Ofcom report.

BT offers a basic phone and broadband package at a reduced rate to people claiming benefits such as income support or universal credit.

But a report by Ofcom says less than 10% of those eligible for BT Basic – or KCOM’s Social Access Package in Hull – actually take advantage of the tariff.

The communications watchdog says more than four million people are eligible for BT Basic, which offers line rental and a small number of calls for £5.10 a month.

As of March 2016, only 321,734 people had a BT Basic standalone landline, with a further 18,452 also taking a basic broadband service for an extra £4.85 a month.

The majority of those eligible for BT Basic but not taking it are likely to have broadband access at home – 65% of consumers in socioeconomic group DE (typically those with the lowest incomes) have a fixed connection – and could save money by switching to a social tariff, although BT Basic does come with a 12GB monthly usage limit.

But Ofcom’s Access and Inclusion report also shows that some eligible consumers may not have a landline phone or broadband.

A quarter of lower income households are ‘mobile-only’ households, compared to only 7% of the highest income households.

Lower income households are also more likely to buy standalone landline services (16% of socioeconomic group DE compared to 8% of AB).

Ofcom says the low take-up of social tariffs could be down to a lack of awareness – research by the regulator in 2014 found that 70% of those eligible for BT Basic were unaware of it.

It says it is working with BT, the Department for Work and Pensions, and consumer organisations to increase awareness and drive take-up.

Line rental cuts for landline-only customers

Ofcom has already announced plans to cut the cost of line rental for BT customers who only have a landline phone.

Landline-only customers – often elderly or vulnerable people who’ve been with the same provider for years – get poor value for money compared to those who take bundled phone, TV and broadband services.

In February, Ofcom said it would cut the cost of BT’s line rental by at least £5 a month for those with standalone landline contracts.

It also wants to introduce safeguards that will stop BT increasing line rental prices by more than inflation.

Line rental prices across all providers have increased by 25%-49% in recent years despite the underlying wholesale costs falling by around 26%.

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