Ofcom: Consumers could be overpaying for broadband, but most get a good deal
Broadband customers outside of their minimum contract term could be paying more than double what it would cost to switch to a fibre deal with another provider.
Ofcom points out in its pricing trends report pricing trends report that the non-discounted price for BT’s standard (ADSL) broadband service is £42.99 a month, while the provider offers fibre deals starting at £24.99 on an 18-month contract.
But Vodafone has fibre packages starting at just £20 a month – less than half the price some BT customers are paying – and there are even cheaper ADSL deals available from the likes of Sky and TalkTalk.
Customers paying £42.99 a month could even switch to Virgin’s 350Mbps package – the UK’s fastest widely available broadband service – and still be 99p better off each month.
Of course, BT isn’t the only provider to hike up the price of broadband for customers after the initial 12 or 18 months of a contract – all providers do it. But Ofcom says price increases from other major providers in the past two years have been significantly lower.
The regulator estimates that in total roughly four million households with standard broadband connections are outside their minimum contract term and could upgrade to fibre for the same price or less.
Value for money
Despite this, Ofcom says most consumers are getting value for money from their phone and broadband services – data use across home broadband and mobile connections is growing by about 45% a year while the average household spend on communications services has fallen by 8% over the past decade, to £117.
A fibre broadband package is on average only £4 more than a standard one, while TV viewers have more choice than ever before thanks to the availability of free and subscription streaming services such as BBC iPlayer, NOW TV and Netflix.
Lindsey Fussell, Ofcom’s consumer group director, said: "Overall, most people are getting good value for their phone and broadband services. We’re all using these services more than we were a few years ago, and on average we’re paying less.
“But there are areas where people could get better value for money. For example, many people could upgrade to faster broadband without paying more on their monthly bill. So we’re working to make it easier for people to take advantage of the wide range of deals on offer."
Ofcom’s report also shows that many mobile customers are overpaying for their mobile phone, because the majority of tariffs that include a handset continue to cost the same amount per month after the minimum term has expired.
About 1.5 million pay monthly mobile customers are outside their minimum term contract, meaning they’ve effectively paid off the price of the handset, but are still being charged the same monthly fee.
Earlier this month, Ofcom said an increase in the number of people signing up to fibre broadband had led to a 28% rise in the UK’s average broadband speed.
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