Average UK household spend on telecoms has fallen nearly 20% while consumers get more than ever from their connectivity services according to new analysis comparing the UK with key EU and international markets.
The findings from Assembly Research reveal that average monthly household spend on telecoms services has fallen by nearly a fifth – more than £18 per month – since 2017. In addition, mobile and broadband bills represent a small and declining share of total outgoings and today account for just 3.8% of total UK household expenditure.
The report, which was commissioned by Virgin Media O2, found that competition in the UK telecoms market has delivered exceptional value for consumers. Over the past decade, consumer prices have fallen while providers have invested billions of pounds in mobile and fixed networks, unlocking faster and more reliable connections and enabling a surge in data consumption.
When compared with key international markets, UK telcos offer some of the best overall value. Typical UK prices for fixed and mobile services are amongst the lowest in Europe, with Britain second only to Spain in terms of the cost of a typical telecoms package*. The average UK monthly price is considerably less than in comparator countries, with bills 95% cheaper than the US, 45% cheaper than Japan, and 16% cheaper than France.
Despite the low prices, the UK has become the world leader in terms of fixed data consumption per capita as people spend more of their lives online and businesses engage more actively in the digital economy. UK consumers pay lower prices for the data they consume compared with their international peers – receiving better value than all comparator countries – while average mobile data usage has trebled in the last five years alone. Despite this, the price paid per megabyte of data used has reached a historical low.
This trend puts the sector in stark contrast to other essential expenditure such as energy, food, transport and housing which have experienced significant inflationary pressure. Energy prices have spiralled over the past year and were forecast to more than quadruple before the Energy Price Guarantee was introduced: if telecoms prices had increased at the same rate, the average monthly mobile and broadband bill would soon reach more than £400, rather than the £77 it stands at today.
With UK inflation at a 40 year high, the effect of price changes in the telecoms sector has been minimal, with telecoms making up just a fraction (0.7%) of the total inflationary pressure in the UK market.
Lutz Schüler, Chief Executive Officer at Virgin Media O2, said: “There is no doubt consumers are receiving exceptional value from our services – over the last decade it’s very clear they’re getting more and using more while paying less. The continued investment we make in expanding and upgrading networks has unlocked a tidal wave of consumption and heralded an age of unconstrained connectivity.
“Despite the exceptional value we offer, we know in a cost-of-living crisis there will be people struggling to afford our services, which is why we’re stepping up to support those who need it and ensuring that everyone can get the connectivity they need and deserve.”
Matthew Howett, Founder of Assembly Research said: “There has been a long-held belief that the UK is one of the most competitive and affordable telecoms markets. By collecting robust evidence from credible sources and from countries the UK is most often compared to, we can confidently now say that belief holds true.
“Putting that spend in context relative to other essential outgoings confirms the real value consumers are getting. While that may be of limited comfort to those really feeling the cost of living pinch right now, the ongoing additional support the sector has been providing, particularly since the pandemic, should help see households through the uncertainty we are all navigating.”
Supporting customers with the cost-of-living crisis
Many telecoms operators have continued with support packages first put in place during the Covid-19 pandemic as the cost of living crisis has started to bite.
Companies have launched new or improved social tariffs aimed at helping ensure households receiving benefits can access affordable broadband, with prices typically starting at £15 per month for unlimited broadband.
Virgin Media O2 has recently cut the price of its social tariff to £12.50 in an immediate benefit to all customers and launched a new faster 50Mbps service. Already this year it has seen a 294% increase in its Essential Broadband sign ups and the company is taking further steps to expand the eligibility criteria for these social tariffs and make sign ups easier in the coming months.
Alongside these social broadband tariffs, Virgin Media O2 has increased its donation to the National Databank – which provides free mobile data, texts, and calls to those who need it – pledging to donate more than 61 million GB of free O2 data. In November, the company announced that the Databank would be accessible on the high street for the first time via 10 O2 stores across the UK, and has put the platform front and centre of O2’s major festive advertising campaign. The company also added additional financial and debt advice services to its zero-rated list so they can be accessed without using any mobile data.