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How are telecoms services regulated?

The Government (through the Department for Digital, Culture, Media & Sport) and Ofcom aim to encourage a competitive market for telecoms services in which consumers can make informed choices and shop around to get the best deals.

Telecoms markets are regulated by Ofcom under the Communications Act 2003, as amended. One of Ofcom’s primary statutory duties is to further the interests of consumers. In addition, Ofcom must have regard to the Government’s Statement of Strategic Priorities (SSP) for telecommunications. One of these priorities is “safeguarding the interests of telecoms consumers, including the vulnerable and less engaged, by ensuring they are better informed and protected.”

Under the Communications Act 2003, Ofcom sets General Conditions of Entitlement on communications providers. These are the regulatory conditions that all providers of broadband, landline, and mobile services must meet to operate in the UK. They set, for example, the basic requirements for consumer contracts, such as the information that must be provided to customers, and the minimum steps providers must take to support vulnerable consumers.

Over the past few years, Ofcom has reformed the General Conditions so that they comply with the European Electronic Communications Code (EECC). The EECC came into force during the Brexit transition period, meaning that Ofcom was required to implement it.

Ofcom also works with the industry to agree voluntary measures to support customers. Measures include codes of practice and the introduction of social tariffs for customers on benefits.

Affordability of telecoms services

Ofcom does not directly regulate the price of retail telecoms services. It takes the view that, in a competitive market, customers are able to shop around to find deals that offer good value for money.

However, the coronavirus pandemic heightened concerns about the affordability of telecoms services. Ofcom reported in July 2021 that 2 million households experienced an affordability issue with their broadband or mobile service in the last month.

Current high levels of inflation have also contributed to affordability issues. Many communications providers raise their prices annually in line with the Consumer or Retail Price Index, plus an additional percentage. Bills for some customers rose by over 11% in 2022. Communications consultancy Farrpoint has estimated that, based on inflation projections, bills will rise by a third over the next five years.

Annual price rises also affect customers who are within their initial contract period. Ofcom’s rules permit mid-contract price increases, although customers may have a right to exit their contract if the terms and conditions are not sufficiently clear about how price increases could affect their monthly bill. Price comparison website Uswitch has called on Ofcom to tighten these rules.

Customers whose initial contract period has ended are moved to a monthly rolling deal if they do not sign up for a new contract. Prices for these ‘out-of-contract’ customers are a persistent area of concern. They typically pay 20% more per month than ‘in-contract’ customers, according to Ofcom. In July 2020, Ofcom secured voluntary commitments from providers to bring the price differential down, especially for vulnerable customers.

Social tariffs

Ofcom considers that targeted discounted tariffs (called social tariffs) have an important role to play to ensure affordable telecoms services for low-income households. There is no mandatory requirement for telecoms providers to offer social tariffs but many providers offer them voluntarily.

Awareness of social tariffs is low, however. As of August 2022, 136,000 households were on social tariffs. That is just over 3% of the number of households on Universal Credit. Ofcom and the Government have “strongly encouraged” all providers to offer effective social tariffs and to actively promote them to eligible customers.

Ofcom has said it will continue to monitor affordability and consider whether further regulatory interventions are necessary. Ofcom has powers to introduce a mandatory industry-wide social tariff. These powers can only be exercised following a direction from the Government. 

Helping customers get better deals

In general, Ofcom believes that telecoms customers can benefit from a wide range of deals that provide good value for money for most consumers. However, research by Ofcom, Citizens Advice and the Competition and Markets Authority indicates that some consumers are not engaging in the market and are paying more for, or receiving less from, services than they could.

Ofcom has introduced various policies designed to help customers get better deals, both in terms of prices and identifying which service is most suitable for their needs. It sets various requirements on providers designed to ensure that customers have access to accurate and comparable information and that customers are not prevented or discouraged from switching to another provider.

Customer protections in this area include:

  • Rules about how providers advertise their services, such as broadband speeds;
  • A ban on practices that tie customers to a particular provider, such as long-term contracts, automatic contract renewals, and locked handsets;
  • Rules to require telecoms providers to send notifications to customers at the end of their contract including information on the best new deals available;
  • Reforms to the process for switching, including allowing customers to change providers by sending a text;
  • Rules and guidance for providers on how to engage with customers who are considering switching.

Vulnerable customers

Ofcom publishes specific guidance on how providers should deal with vulnerable customers, who are more likely to display low levels of engagement and may therefore struggle to find the best deal. Providers are required to have procedures in place to ensure vulnerable customers and customers in debt are treated fairly. Ofcom also advises that providers actively try to identify vulnerable customers and make them aware of the targeted support that is available, including social tariffs.

Consumer satisfaction and complaints

Most telecoms customers are happy with their service. According to Ofcom, the UK telecoms regulator, 90% of mobile customers were happy with their mobile service in 2020. The satisfaction rate for broadband and landline customers was lower (80% and 77%, respectively).

Ofcom has launched a voluntary compensation scheme whereby customers of participating providers automatically receive compensation for delays to repairs and installations. For customers who cannot satisfactorily resolve disputes through their provider’s internal procedures, Ofcom has accredited two alternative dispute resolution schemes. All providers are required to be members of one of the schemes.

Customers can also report complaints to Ofcom. Ofcom does not investigate individual cases but collects data to monitor consumer issues, as does the Communications Consumer Panel.

Sources of support and advice

Ofcom publishes a wide range of advice articles on its website, including:

Advice is also available from consumer groups. Citizens Advice, through its Phone, internet or TV issues website, has advice on topics such as how to switch to another provider or dispute bills. Consumer charity Which? similarly has articles aimed at helping consumers in choosing and switching Broadband, mobile & TV services.

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