To ask His Majesty’s Government what plans they have, if any, to prevent internet providers from increasing the price of broadband connections by up to 3.9 per cent above the Consumer Price Index measure of inflation.
My Lords, this is clearly a difficult time for households across the country that are struggling to pay their bills as a result of the global rise in the cost of living. While operators are continuing to invest in gigabit-capable services, the UK benefits from some of the cheapest retail pricing of broadband in Europe, with only around 4% of a typical household’s monthly budget going on telecommunications services. However, we understand the challenges many families are facing at the moment, so we are calling on operators to consider carefully the need for above-inflation price increases and the impact they may have on people across the country.
My Lords, there is absolutely no justification for the inflation-busting 14% price rise for broadband. BT, EE, PlusNet, Shell Energy, TalkTalk and Vodafone are acting in unison; they have trapped millions of people into 18- to 24-month contracts and are forcing them to pay 14% more, mid-term. Those wanting to leave are being forced to pay a £200 exit fee. I ask the Minister, first, to ban mid-term contract price hikes and, secondly, to change the law so that customers can exit free from any broadband contract longer than 12 months.
The Government believe it is important that consumers are fully aware of the clauses in their contracts so that they are empowered to make informed decisions, but we also are mindful of the impact on families at this time. That is why my right honourable friend the Secretary of State earlier this month met chief executives from major broadband and mobile providers and asked them to consider very carefully the need to make above-inflation price increases at this moment. Households struggling to afford telecoms services should speak to their provider. Social tariffs are available, as we heard in a Question earlier this week, but also, since last July, providers have committed to support any customers struggling to pay their bills.
My Lords, is this not an opportunity for the Government, in rolling out their digital programme, to ensure that this area is properly regulated? Could Ofcom not play a crucial role here? All of us are bound by our contracts, as my noble friend the Minister rightly pointed out, which in most cases are locked in for 24 months, and we are going to face an average 11% increase. For vulnerable households, this is just too much.
Ofcom does have an important role to play here as the independent regulator, but, as I say, mindful of the particular challenges that households are facing, my right honourable friend the Secretary of State spoke directly to companies, asking them to consider very carefully the decisions they are making and the impact on their customers.
My Lords, was the Minister struck, as I was, by the observation in Ofcom’s December pricing trends report that there are millions of consumers who are out of contract, and so free to switch, but have not yet done so? Does he agree that these people could make significant savings, often without having to switch at all, as many providers will drop their prices as soon as you ring and threaten to leave? What are the Government doing to make this group aware that they can do this?
Yes, it is very striking. Many people could be saving money and are not aware of it. That is why it is important that contracts are clear, but it also highlights the importance of consumer advice groups and, indeed, debates such as this, to draw the attention of people to the contracts they have signed.
My Lords, of course everybody should read the contracts they sign, but has the Minister read his broadband provider’s contract? These contracts are impossible to understand. They have subcontracts and other regulations—there is no possibility that people will understand the contracts that they have to sign if they want broadband. What my noble friend describes is anti-competitive, inflationary and likely to drive down digital inclusion. This is a matter for the Competition and Markets Authority. The Minister should think about referring this to the Competition and Markets Authority for profiteering and setting up a cartel.
At the risk of sounding like a geek, I have read my contract. I did so because some operators permit their customers to exit their contracts penalty-free when there is a price rise. Mine did; I looked at it, I shopped around and I saved some money. People would be well advised to do the same, but it is important that the industry tells people about the decisions it makes. That is why the Secretary of State brought chief executives in and asked them to consider carefully the impact of the decisions they make and how they communicate them.
Has my noble friend, as well as having the experience of reading a contract, had the experience of trying to communicate with these providers? You sit on the phone for hours and hours and then get passed from pillar to post. Can we do something to make sure that their customer relations are rather more efficient?
On that, my experience was indeed a bit more painful. It is obviously for commercial providers to decide how they provide services to their customers in a way that allows them to keep costs down and keep bills down while satisfying people so that they want to stay with them.
My Lords, there is a pattern here. The Government are keeping down wages for our heroes in the public sector, such as teachers, nurses and firefighters, but at the same time, they are doing nothing to curb the profiteering by energy, broadband and other companies, even though, as my noble friend just said, this is inflationary. Can the Minister explain the double standards that they are operating?
My Lords, the action we are taking is to beat the evil of inflation, which is what lies behind these price rises. At the same time, we have acted quickly to support families, through such things as the energy price guarantee and the energy bills support scheme, as well as further help for the most vulnerable households of up to £200.
My Lords, will the Minister comment on the problems faced by vulnerable older people who might just have started trying to get tech-enabled and just signed up for a broadband contract? They do not understand how these things work, then are suddenly faced with a penalty if they try to change to a better rate and are locked into a contract that was never properly explained to them.