Ofcom publishes reporting showing bundles save people 24%
The UK broadband market while very competitive is also one where those customers who are silently loyal are often the ones paying the highest prices and the latest Ofcom pricing report summaries this and other feedback from looking the pricing of broadband, phone, mobile and TV services and makes some comparisons between 2017 and 2013.
When the recent Ofcom speed test panel results were published a lot of coverage went on about how superfast broadband was cheaper than standard broadband which was a bit of a puzzle at the time when you looked at the prices we list, but this pricing report offers the clarity confirming what we suspected.
The prices for standard broadband have increased – particularly for BT customers outside their minimum contract period. Data collected by Ofcom shows almost half (46%) of customers buying a standard broadband service and 32% of people buying a superfast broadband service are outside their minimum contract term. These customers typically pay a non-discounted price. Customers of all the large providers who are paying a non-discounted price for standard broadband could take out a new, equivalent superfast broadband contract for the same price, or less. The non-discounted price for BT’s standard (ADSL) broadband service in May 2018 is £42.99. BT’s superfast (fibre-to-the-cabinet) services start at £24.99 on an 18-month contract, or £35.99 for an unlimited service.Extract from Ofcom pricing report
We should add that the superfast BT pricing mentioned is not familiar but we believe they are referring to an Infinity 1 service with a usage limit and for the major providers we gave up listing VDSL2 and FTTP services with limits some time ago due to the reality that once people get access to decent speeds their data usage normally far exceeds the limits and the unlimited products will therefore work out cheaper.
One element that may grate in the report is the constant referral to ADSL/ADSL2+ versus superfast services e.g. Superfast products (i.e. connections with an advertised speed of 30Mbit/s or higher). It would be much better for the regulator to use technology definitions in industry reports like this e.g. FTTC or VDSL2 particularly as not everyone buying a VDSL2 service will hit speeds of 30 Mbps but even for many of those that don't hit the superfast target speeds the download or upload speed (or both) are much better than their previous ADSL or ADSL2+ service.
The moral therefore and its one we have repeated many times, both in print and in TV and radio interviews is that to get the best pricing you need to chase the bargains and be prepared to switch broadband provider every 12 or 18 months and while bundles can have brilliant promotional offers do look at the out of contract pricing e.g. if you get used to a TV service as part of your bundle you may be reluctant to switch at the end of the minimum term. The advice for those who want to remain with a broadband provider and if you are happy to agree to a contract extension to negotiate a midway price between their best offer and their standard pricing.
On the topic of ADSL/ADSL2+ prices rising, for the overall basket on out of contract pricing the big jump in BT ADSL2+ pricing in 2016 is the cause of this and given ADSL2+ and a phone line has had short term offers of £15/m in 2018 and today can be found for £18.95 a month those paying the £40 a month or more need to do some online shopping.
So what is Ofcom going to do to help the consumer? Well the initial focus is on end of contract notifications with proposals and analysis/research expected to be published in July. Getting existing providers to notify a customer that their minimum term is coming to end may be a hard sell to the major communications providers in areas with competition but there are also important points around what that messaging involves and what providers are allowed to do, previous rule changes stopped automatic renewal of contracts and if the messaging is done wrong providers could use notifications as a way of quietly re-introducing semi-automatic contract extensions.
One of the problems for the future will be if the out of contract notices push the notion of accredited comparison sites even more than today, we along with a number of other broadband information sources have broadband listings but cannot afford the costs and time involved in joining the Ofcom accreditation scheme. We endeavour to keep our broadband listings as up to date and accurate as the accredited sites and we believe we exceed what they offer in many cases particularly in the area of full fibre and listing many smaller operators that will never be featured on the accredited sites. For example SimplifyDigital (who have worked with Ofcom on the pricing report) is only showing ADSL2+ services for a random postcode in Kent that actually has ADSL2+ and FTTP at 330 Mbps down and 50 Mbps up available and this is not a one off, in some cases on different sites the 'fibre' services are shown but included are operators who not do currently sell in Openreach GEA-FTTP areas, which may be behind some of the public anger around coverage levels i.e. comparison site says yes to TalkTalk but TalkTalk so no. Our availability engine results in FTTP services going to the top of table when we check the same postcode.
The drop in the price of Openreach 40/10 GEA-FTTC service which has been mandated by Ofcom from what we can see has had no effect for those already in contract, beyond a shift from using the 40/2 product to a 40/10 service that happened in 2017 TalkTalk and Plusnet FTTC customers. What the price drop seems to be doing is allowing for better promotional pricing.
One area that needs the resources of the industry regulator to investigate is also why when the minimum term for GEA-FTTC from Openreach was reduced to just one month in July 2017 why are so few no long minimum term contracts available. Oddly what has happened in the last year or so is the fixed price contracts from TalkTalk with 12, 18 or 24 month terms and the ability for people to switch down to lower prices if they are happy to extend the contract term, of course the public benefit from fixed pricing which on a tight household budget under pressure from things like council tax price rises can be important but this may also have a negative effect in terms of meaning people are free to upgrade to faster broadband services when they arrive in an area e.g. Virgin Media, Hyperoptic, Gigaclear, Openreach FTTP, Airband to name just a few where people will be annoyed at being stuck in a long contract.