By Trevor Clawson.
When a technical fault within the 02 network recently consigned a small but significant percentage of the online population to a kind of purgatory from which no data could enter or escape, one commentator described the outage as a digital catastrophe.
Perhaps “catastrophe” was putting it a bit strongly, but the fact is that whether we’re on the move or sitting at home in front of a laptop, most of us consider fast internet connectivity to be something closer to a human right rather than a luxury. From providing small businesses with a means to trade online, through to watching the latest must-see boxed set from Netflix, high-speed broadband underpins work and leisure in the early twenty-first century.
That’s if you can get it at an affordable price. According to a new report from telecoms regulator, Ofcom, over 50% of British households are settling for second best when it comes to broadband speeds. What’s more, at least some of us are being overcharged for the privilege of living our online lives in the slow lane. Ofcom is proposing action to ensure that more people get a better deal on both price and speed.
The Right Connection
In theory, at least, the vast majority of us should be logging onto the net using so-called ‘superfast’ broadband connections – defined by the government as 24 megabits per second or above. However, according to Ofcom’s own figures, while around 94% of UK households can now access superfast broadband, only 54% have signed up.
That could be explained in terms of consumer choice, with each household buying connectivity according to the relative costs associated with basic and superfast packages. Or to put it another way, we all get what we are prepared to pay for. But it’s not as simple as that. The regulator’s research suggests that millions of people could take advantage of the higher available speeds, without necessarily having to pay any more.
The Loyalty Penalty
As Ofcom explains, most broadband packages – which come complete with a router – require consumers or small businesses to sign up for at least a year, and during that period they are effectively prevented from securing a better deal elsewhere. However, the regulator says that once the contract period comes to an end, many customers could upgrade to faster speeds at a lower cost. As things stand, those who shop around can pick up a superfast package from around £20 a month.
Meanwhile, those who stay loyal to their provider, and perhaps stick with slower speeds in the belief that they are saving money, could well be paying more than they need. In common with players in other industries – insurance is a notable example – Ofcom says some providers are penalising loyal customers by upping their charges, while simultaneously offering cheaper deals to attract new business.
“We’re concerned that many loyal broadband customers aren’t getting the best deal they could,” said Sharon White, Ofcom Chief Executive.
“So we’re reviewing broadband pricing practices and ensuring customers get clear, accurate information from their provider about the best deals they offer.”
The Consumers Association shares that concern.
“Our research has shown that many UK households are paying huge loyalty premiums for staying on the same tariff when they could be paying less for a faster internet service,”
said Alex Neill, Managing Director of Home Products and Services at Which magazine.
Best Available Tariffs
So under plans published last week, Ofcom is proposing new rules that will telecoms providers – and in addition to broadband operators, those offering landline, mobile and pay TV services are also included – to be much more transparent about their pricing policies. In particular, providers will have to alert existing customers about the ‘best available tariffs’ when existing contracts are coming to an end.
Meanwhile, the regulator is to conduct a review of the way providers treat their long-term customers. For instance, Ofcom estimates that customers who take a combined landline/broadband package are charged, on average, 19% more, once the introductory offers have expired. If the review finds evidence of unfair treatment, action is promised.
The drive towards greater transparency has been welcomed by at least some in the industry, including Greg Mesch, Chief Executive of CityFibre, who commented:
“It is right for Ofcom to start to address the problems created by a lack of impartial information. It has never been more important to ensure that consumers are empowered to make an informed choice.”
The Need for Speed
All this matters because of the changing nature of our online activity. Wind the clock back ten years or so and most of us could get by on relatively modest connection speeds because online activity tended to be restricted to web-browsing and email. But in 2012, Netflix launched its video streaming service in the UK. Since then, our media consumption habits have gone through a transformation. These days we are streaming movies and TV in high definition, often in multiple rooms – and that puts new demands on the online infrastructure.
Ofcom’s own thumbnail guide suggests that for the most basic browsing – web pages, music, Youtube – a consumer needs 10 megabits per second. High Definition video watching requires superfast speeds above 24 megabits. And if a number of people in a household are simultaneously watching different HD video, the requirement might be closer to 300 megabits.
A Competitive Market
But it is a complex market. Fibre broadband – marketed as the Rolls Royce consumer connection – can deliver speeds of up to 60 megabits per second, but there is a lot of variation between providers. Ofcom acknowledges that consumers may be deterred from seeking out cheaper deals because they may be confused by the options. So in addition to new regulatory proposals, the regulator has launched a “Boost Your Broadband” campaign.
Fronted by Gloria Hunniford, the purpose of the campaign is to make the comparison process easy. Consumers who go to the Boostyourbroadband.com website can run a simple check to see if they are a) getting the speeds they need and b) whether the price is right.
In practice that involves entering a postcode and then answering some simple questions designed to establish the ideal package for the consumer in question. Or to put it another way, the site will suggest an optimal speed based on what you do online. However, Boostyourbroadband falls short of being an all-singing, all-dancing price comparison service. Once it has given you the basic information, it is up to you to find the right provider.
The Haggle Factor
Which magazine suggests that your first port of call should be your existing operator.
“Try haggling for a better deal. A few minutes of your time could potentially save you hundreds of pounds a year,” said Alex Neill.”
Ofcom is currently putting its transparency proposals to the industry. It remains to be seen whether the subsequent regulatory action will have real teeth. In the meantime, consumers should not assume that the deal offered by a provider is the best available.