The telecoms industry has been criticised for raising prices and not doing enough for those in financial hardship. Beyond providing social tariffs, we've identified £300m of initiatives operators have put in place at their own cost to help ease the pain
Ofcom’s research points to a growing affordability challenge, with almost three in 10 households struggling to pay for at least one communications service. With inflation still high and consumers facing rising prices across the board, operators have sought to support their customers.
Beyond providing social tariffs, we’ve identified 20+ initiatives the principal UK operators have provided over the past 18 months as the cost of living crisis started to bite in late 2021. We estimate the value of these support measures so far exceeds £290m, with many of them likely to remain in place for the foreseeable future.
Of the initiatives we’ve tracked, £100m of support has been made available for all customers, while £90m has been targeted at reducing digital exclusion. Financial support measures (often for vulnerable or low-income groups), and help for small businesses are worth £58m and £43m, respectively.
Similar initiatives have been launched in other countries as operators have sought to help keep society connected. Measures include free broadband for businesses, commitments not to raise prices and low-cost tariffs for families and pensioners, all of which can complement government actions, such as direct subsidy payments.
Support began during the pandemic but has continued in the face of new challenges
The UK telecoms sector offered a vital lifeline following the outbreak of COVID-19, not only through the connectivity it delivers but with specific measures to help school children, frontline workers and vulnerable groups in society. Operators stepped up again to support those impacted by the war in Ukraine (e.g. with free calls, texts and data) and to help customers struggling with the rising cost of living, which began to bite in around late 2021. However, with inflation still significantly above average and consumers facing higher prices across the board, Ofcom’s research points to a growing affordability challenge for industry. According to the regulator’s estimates, 29% of all UK households were having difficulty affording at least one communications service in January 2023, up from 20% two years earlier.
In response, many operators have voluntarily launched or improved social tariffs aimed at ensuring households receiving benefits can access affordable broadband services. In April 2022, Vodafone (via its sub-brand VOXI) enhanced its £10 mobile social tariff, making unlimited 5G data, minutes and calls available for up to six months for anyone receiving benefits. This plan would normally cost £35 per month, representing one of the largest savings on the UK market. In January 2023, BT announced it was supporting nearly 1 million customers with subsidised or discount tariffs such as ‘Home Essentials’, and that it had seen an acceleration in take-up.
Despite the widespread provision of social tariffs (for which operators receive no funding from central government), industry has been criticised for low adoption and is under pressure from policymakers, consumer groups and others to do more to help those customers facing financial hardship. This criticism has largely ignored further initiatives the UK’s principal operators (BT/EE, Three, Virgin Media O2 and Vodafone) have put in place, which include smartphone donations and the creation of ‘data banks’ to reduce digital exclusion. In total, we estimate that more than 20 measures have provided over £290m of support to consumers and businesses so far, some of which will remain or continue to have an impact for the foreseeable future.
Quantifying the level of support provided by UK operators so far
The 20+ measures we’ve identified can be divided into four broad categories: efforts to reduce digital exclusion (eight initiatives); financial support, particularly for vulnerable or low-income groups (seven); value for all customers (three); and help for businesses (three). Figure 1 shows the estimated value of each grouping. The calculations are exclusive of the increases in the wages of staff and the one-off payments that have been made by operators to support their own employees with the effects of high inflation and rising prices.
Measures available to all customers represent the largest share of the overall available support – worth close to £100m, or 34%. EE’s Stay Connected offering ensures that pay monthly subscribers can continue to access the internet and key apps, such as Maps or Whatsapp, even if they run out of data – albeit at a reduced download speed. In November 2022, Virgin Media O2 gave an upgrade to “millions” of its broadband customers without charge, raising average speeds by up to 24%. Earlier that year, Virgin Media O2 also took the decision not to reintroduce mobile roaming fees – a move it considers could save a family of four going abroad for two weeks £100 or more.
Nearly £90m (31%) of the total support relates to efforts to narrow the digital divide and help those experiencing data poverty. In May 2022, Three relaunched its Reconnected campaign, encouraging customers to donate their old phones to help disadvantaged people get connected, with six months of unlimited services. Similarly, in June 2022, BT announced a partnership with charity Home-Start UK, through which it will provide 2,500 households with no connectivity free laptops and free access to its Home Essentials social tariff. Vodafone, Three and Virgin Media O2 have also increased their contributions to the National Databank, which distributes free mobile data, texts and calls to the unconnected through Good Things Foundation's network.
We estimate financial support initiatives – which are often targeted at vulnerable or low-income groups – are worth just under £58m, or 20% of the total. During the pandemic, operators zero-rated access to popular healthcare and education websites. Amid the rising cost of living, both Three and Virgin Media O2 are enabling customers to access several websites that provide financial advice and guidance without eating into their data allowances.
Support measures to help small and medium-sized enterprises (SMEs) are also in place today (worth over £43m, or 15%), recognising that it is not just households that may be struggling financially. For example is Vodafone’s offer of free broadband for a year to help SMEs mitigate rising costs and stay connected to their customers. The measure, unveiled in October 2022, highlights a potential annual net saving of up to £328 per business.
Operators in other countries have been similarly proactive
Operators in other countries played a similarly key role during the pandemic to help keep people, firms and institutions connected. Telco initiatives reflected those seen in the UK, with additional mobile data and TV channels, and broadband speed boosts being common offers of support. After the start of the crisis in Ukraine, operators – particularly those in Europe – mobilised quickly to facilitate communications to and from the country. Beyond free (or discounted) connectivity, seven operators across Hungary, Poland, Romania and Slovakia deployed additional infrastructure near borders to improve mobile coverage and to handle the increase in network traffic in these areas.
However, operators have faced calls to do more to help consumers and businesses whose budgets are being stretched. In Canada, 18 telcos are now offering 50Mbps/10Mbps broadband for C$20 (£12) per month to low-income families and seniors as part of the ‘Connecting Families’ scheme. In January 2023, despite citing the inflationary environment and its ongoing 5G investments, Iliad committed not to raise the price of its flagship mobile tariffs for the next four years – the only operator in France to make such a pledge. In Ireland, Vodafone is offering SMEs free broadband and cybersecurity protection to help them navigate the current economic downturn. Despite facing their own commercial and operational headwinds, certain operator initiatives have been broadened, renewed or are ongoing. They will therefore remain in place for some time to come, complementing policymakers’ own actions, for example the US Government’s Affordable Connectivity Program, which provides eligible households with a benefit of up to $30 (£24) a month towards internet services.
Methodology
In producing this analysis, we have considered the following initiatives:
BT/EE: Partnerships with Home-Start UK and JustEat; free Apple services with the Essentials Plan; NHS discounts; fixed prices for certain customers; and the Stay Connected offering;
Three: Data Bank contribution; Reconnected scheme; zero-rating websites; and support for businesses;
Virgin Media O2: Greggs Hardship Fund; Data Bank contribution; Community Calling scheme; zero-rating websites; no roaming charges; Hubbub Tech Fund; fixed prices for certain customers; and free service upgrades; and
Vodafone: NHS discounts; everyone.connected campaign; and support for businesses.
