Labour launches 3 point plan to ease the broadband bombshell and help families and firms facing cost of living crisis made in Downing Street
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As family bills rocket as a result of the economic crisis made in
Downing Street Labour is today calling on the government and Ofcom
to stop a broadband bombshell hitting families and firms with a
three point plan to reign in expected broadband price increases and
ease the cost of living crisis. Ofcom reports that nearly a third
of households (8 million households) are having problems paying for
their broadband, phone and streaming bills, double the number last
year, and the...Request free trial
As family bills rocket as a result of the economic crisis made in Downing Street Labour is today calling on the government and Ofcom to stop a broadband bombshell hitting families and firms with a three point plan to reign in expected broadband price increases and ease the cost of living crisis. Ofcom reports that nearly a third of households (8 million households) are having problems paying for their broadband, phone and streaming bills, double the number last year, and the highest since their records began. In a recent Lloyds Bank survey, 26 per cent of adults not using the internet in the past three months gave “it’s too expensive” as a reason. At the same time, 97 percent of eligible low income families are currently missing out on a social tariff. Meanwhile, it has been reported that broadband firms are in line for a £1.7 billion windfall as a result of above inflation price rises. Labour is calling for:
1) A
reversal of changes the government made in 2019 which allowed
regulated wholesale prices to rise with CPI rather than costs, so
that telecoms wholesalers and internet service providers don’t
get a windfall from sky high inflation whilst families and firms
struggle to pay their bills.
2)
Ofcom to investigate and take action to strengthen consumer
protections including taking action on mid contract price rises,
early termination costs for social tariff customers, and loyalty
penalties where long term customers pay more than new
customers. 3) An industry wide social tariff for low income families. Industry including wholesalers like Openreach, must work with Ofcom and consumer groups to develop a mandatory well-advertised broadband social tariff for low-income families, or the Party will set and legislate for one in government. Broadband is the newest utility, an essential for everyday life, not a luxury. Yet the Conservative cost of living crisis means that many families are finding internet access increasingly unaffordable, or impossible. Without access to the online world, children can’t do homework, parents can’t access the labour market, social security, or the best rates for services or goods, and grandparents can’t stay in touch face to face with family over distances. Broadband wholesale price increases used to be capped at costs with prices stable over many years. However, in 2019, the government changed regulation so the price of existing Openreach networks could increase in line with CPI inflation instead. Wholesale prices for 2023 will be set this October with inflation estimated to reach a peak of 13 percent. As a result it has been reported that broadband bills could increase by a quarter. Lucy Powell MP, Labour’s Shadow Secretary of State for Digital, Culture, Media and Sport, said: “Internet access is a necessity not a luxury, yet the economic crisis made in Downing Street is making it increasingly difficult for families to make ends meet and stay connected. “Our 3 point plan will ease the broadband bombshell facing families and firms, at a time when they are already facing eye watering energy bills, and mortgage and rent increases. Whilst the Conservatives crash our economy, Labour will ensure accessing and connecting to digital infrastructure powers growth across our economy to ensure people and places aren’t left behind.” In her Labour Conference speech Shadow Digital, Culture, Media and Sport Secretary Lucy Powell pledged a new settlement for the digital age, building on our digital infrastructure to make Britain one of the most connected nations in the world for gigabit broadband, and industrial 5G. ENDS Notes to editors: Detail of Labour’s 3 point plan to ease the broadband bombshell. 1) A reversal of changes the government made in 2019 which allowed regulated wholesale prices to rise with CPI rather than costs, so that telecoms wholesalers and internet service providers don’t get a windfall from sky high inflation whilst families and firms struggle to pay their bills. Labour is calling for government and Ofcom to revert to the pre-2019 regulation of Openreach wholesale prices where the company could only increase prices by costs, rather than CPI+0%. This cost is then passed on to Internet Service Providers, who pass on the cost to consumers. Consumers will be hit by huge rises in broadband payments, while Openreach sweat their assets of pre-existing copper cables, which are already in the ground and cost very little to maintain. Broadband prices are increasing because of decisions explicitly made by the government and Ofcom.
Telecoms companies warned government and Ofcom they could not absorb wholesale network increases.
It has been reported that the UK’s broadband firms are set for £1.7bn windfall with above-inflation price rises and that broadband bills could increase by over 25%. https://www.theguardian.com/business/2022/sep/07/uks-broadband-firms-set-for-17bn-windfall-with-above-inflation-price-rises 2) Ofcom to investigate and take action to strengthen consumer protections including taking action on mid contract price rises, early termination costs for social tariff customers, and loyalty penalties where long term customers pay more than new customers. To help all families with broadband Labour would direct Ofcom to investigate and present an action plan to tackle sharp practices in the telecoms sector including above inflation mid contract price rises, which are not a feature of other utility bills, and to protect customers from unfair connection or disconnection charges, or penalties when families switch providers. Broadband and mobile are the only utility sectors where mid-contract price increases are allowed. In energy and gas companies cannot increase prices mid contract unless there is a change in VAT rates. In water prices are negotiated with OFWAT the regulator every 5 years, and people do not have fixed term contracts and tariffs in the same way they do in other sectors. 3) An industry wide social tariff for low income families. Industry including wholesalers like Openreach, must work with Ofcom and consumer groups to develop a mandatory well-advertised broadband social tariff for low-income families, or the Party will set and legislate for one in government. Currently there is no requirement for telecoms providers to offer social tariffs for broadband products. Whilst Ofcom and the government has encouraged firms to do so, there is no universal offer for low income families in and out of work. Labour wants Ofcom to work with telecoms providers and network operators to design a universal social tariff. This would be funded by telecoms providers, with a contribution from network operators such as Openreach who currently benefit from increased wholesale costs but do not contribute to existing social tariffs which are wholly funded by some internet service providers. Ofcom say that 4.2 million households could halve broadband bills (average annual £144 saving) by taking up special discounted packages yet 97% of eligible low-income households yet to take advantage of specially-discounted superfast broadband deals. Recent Ofcom research shows that 8 million households having problems affording communications services – doubling since 2021. https://www.ofcom.org.uk/news-centre/2022/record-number-of-households-struggle-to-pay-bills Which? has recently carried out research on social tariff savings and advertising which shows that:
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