When things go wrong with telecoms, consumers need a voice

Mobile phones and broadband are essential for modern life — they’re not luxuries like they were a generation ago. But policy and regulations haven’t caught up with this change, and this causes real problems for consumers.

Data we’ve released today shows that 60% of broadband customers experienced a slow or broken connection in the last year. Nearly a quarter of those who experienced problems (24%) say this stopped them working or studying. 21% say it impacted their ability to keep in touch with family and friends.

In the telecoms market as a whole, our landmark study of consumer detriment showed that people deal with 27.8 million problems each year with their phone, TV or internet service. This costs consumers a staggering £4.2 billion in total — a meaningful hit to people’s living standards. And, when things go wrong, they’re often not easy to fix. On average, it takes people a frustrating 2.4 hours to fix a problem with their broadband.

Little wonder that, in calls to our consumer service helpline, telecoms ranks in the top four problematic markets just behind second hand cars, dodgy builders, and energy companies — not a comfortable club to be part of.

Problems with telecoms vary widely, from pricing to redress. In broadband, for example, consumer loyalty is exploited: prices jump by an average 43% after people’s initial contract ends — even more in the energy market, subject of so much public attention. In the mobile phone market, 3 of the 4 biggest companies still charge people for their handset even after it’s fully paid off. But issues go beyond pricing. Compensation, for example, is a hassle to claim and often doesn’t cover the cost of problems — when my broadband went down for a whole day last year, I was offered 88p.

Who’s standing up for consumers in telecoms?

Problems like these have many different causes. But one big explanation for the problems we see in telecoms is that, when things go wrong, consumers don’t have a strong and independent champion to fight their corner.

This situation is unusual: in other essential markets, from energy to water, companies pay a small levy to fund an independent advocate, outside the regulator, to fight consumers’s corner. This makes sure consumers are represented in the big debates of the day, from public issues like pricing to more technical decisions that don’t make it into the papers. As the chart below shows, consumers now spend significant amounts on telecoms but spending on advocacy still doesn’t reflect this. As things stand, it’s limited to a small, if well-respected, panel of external advisors based at the regulator Ofcom.

In telecoms, consumers spend significant amounts, but they don’t have a strong and independent voice

Can’t the government or regulator just fix these problems?

None of this is to say that the government or the regulator aren’t doing their jobs. The Department for Digital, Culture, Media and Sport and Ofcom have both become stronger on consumer issues in recent years. They would argue, rightly, that they’re making headway on some issues of real concern to consumers.

There’s also a busy agenda of work for both organisations to get on with: pursuing universal broadband coverage; implementing higher compensation that is paid automatically when things go wrong; requiring clearer pricing to separate the costs of mobile handsets from the monthly service charge.

But for a number of reasons, even a well-meaning and purposeful regulator and government will struggle when there’s an advocacy gap.

For one thing, it’s hard for the regulator to make progress when they get so much heat from one side of the argument. The telecoms industry is infamously litigious, meaning that many of Ofcom’s decisions head straight to the courts. That puts huge resource demands on the regulator and, because industry is so well-resourced to provide evidence and expertise — while consumer groups are not — these cases are hard to win. That why it’s understandable that Ofcom sets a high bar for action and often ends up seeking voluntary agreements, even where problems might be better solved through quicker and tougher intervention.

But there’s also another risk of leaning too heavily on government: when a government department finds itself becoming the policeman for consumer interests, that can lead to inflexible laws. The government ends up legislating to fix a long list of consumer problems rather than finding a deeper and more sustainable solution — giving consumers a powerful voice. That’s particularly important in a sector that’s changing as fast as telecoms, where the consumer problems today will be different from the problems of tomorrow.

Moreover, a government’s attention will inevitably reflect the more politically salient issues of the day: broadband speeds, for example, or inadequate compensation. What about the long list of technical issues that get less public attention, but where consumers have billions of pounds at stake?

In the coming months and years that list includes: complex questions about how a new broadband Universal Service Obligation should be designed and funded, how the spectrum for next generation mobile services — 5G — should be allocated, a review of wholesale prices in the Fibre Broadband market, the transposition of aspects of EU law covering telecoms and consumer rights, ongoing arguments over BT Openreach, and the application of new requirements on providers to protect vulnerable consumers. You can bet that industry — particularly the larger incumbents — will make its voice heard in these debates. But will consumers be able to? As things stand, over a third of the people we spoke to said they feel government doesn’t take into account the interests of ordinary people in big decisions like these.

All of this explains why, this spring, when the government publishes its Consumer Green Paper, we want to see a commitment to fill the advocacy gap in telecoms with a powerful and independent consumer champion.