Britons are facing a cost-of-living crisis. With the annual rate of inflation running at 6.2 percent, a thirty-year high, nearly eight million adults are estimated to be behind on one or more household bill, with just over six million believed to have gone without energy, water, or electricity since the start of 2022, according to the Money Advice Trust.
Consumers are being hit by all angles, with UK households potentially facing the biggest energy bill shock since the 1950s, and shop price inflation accelerating to 2.1 percent in March, up from 1.8 percent in February - the highest rate in more than a decade, according to the BRC-NielsenIQ Shop Price Index. And things aren’t expected to improve anytime soon. The Office for Budgetary Responsibility has predicted that living standards will not recover to their pre-pandemic level until 2024-25.
Property managers may be feeling powerless to help residents, given that the cost-of-living crisis is hitting their residents from a myriad of places. However, there is one price rise that can be mitigated – the broadband and telephone bill. While less publicised, most broadband providers (BT, EE, Plusnet, Vodafone, O2, TalkTalk, Shell Energy, Sky etc.) are raising their ‘in contract’ prices, in line with the rate of inflation. They then add up to 3.9 per cent.
This means that millions of consumers will be facing increases of up to 12 percent from April. On average, consumers' annual broadband bills are set to go up by an average of £2.86 a month, and £34.33 over the course of the year. This is certainly an unwelcome addition to the mounting costs of their outgoing bills.
So how do they get away with this? Current Ofcom rules require providers to offer customers the right to exit their contract, penalty-free, if they surprise them with mid contract price rises. However, these broadband providers are avoiding this by adding details of an annual price rise into the ‘small print’ of their customer contract. The customers then end up paying significantly more than the advertised headline price offer that they signed up to.
We think this is wrong, which is why we haven’t raised our in-contract prices (and why we haven’t ever done so, since our inception over ten years ago). We believe a deal is a deal. And it’s also why we have written to Ofcom to request an investigation into this industry practice and to consider reform that would allow customers to terminate their agreement and switch provider if they are impacted by such price rises in the future.
Under Ofcom General Condition C1 (1.14-1.17), any price variation clause must be sufficiently prominent and transparent at the time of purchase, so that the customer can be informed of their contract working in this way. However, in a nationally representative study of 2,000+ consumers that we commissioned, 60 percent of the respondents stated that they were not aware that the price of their broadband would increase during their contract. Half (47 percent) felt misled by their broadband provider, and half (48 percent) would not have signed their contract if they had been aware. We believe that these results indicate that the requirements of Ofcom General Condition C1 (1.14-1.17) requirements are not being met.
But where does that leave property managers? Firstly, by partnering with a broadband company like Hyperoptic, they can be sure that they are giving residents an opportunity to take a service from a provider that isn’t raising prices. And secondly, they can encourage residents to sign our petition that calls for freedom for consumers to switch broadband providers – penalty free – whenever they are faced with an unfair price hike. We will be sharing these signatures with Ofcom as evidence of consumer sentiment: https://www.hyperoptic.com/free-to-switch
Broadband providers are not all the same. With rising living costs, we believe our industry could have bucked the trend and helped consumers. Most costs in fixed broadband come from building the network. Once built, the cost of maintaining the infrastructure is much lower. That means our industry can mitigate the impact of inflation, much more so than other industries.
We hope that Ofcom, as our industry regulator, urgently investigates industry compliance with the rules governing price variation clauses. But you don’t have to wait to give residents an opportunity to switch to better broadband, which is not only hyperfast, but also hyperfair. Just reach out to one of our experienced relationship managers to explore how you can enhance your offerings to your portfolio’s residents: https://www.hyperoptic.com/property-managers/