Broadband affordability in England and Wales: In need of levelling up

The entry level monthly price of broadband is higher than £20 in 33% of LSOAs of England and Wales.

We found that as of December 2021, the lowest available monthly cost of broadband across England and Wales varied from £11.75 (a FWA service from Reeth) to £39.99 (an FTTP plan from KCOM).

Introduction

There are various definitions of broadband affordability. In the UK, Ofcom states that ‘A good or service is considered to be affordable for a consumer if they are able to purchase it without suffering undue hardship’. (According to Ofcom, ’an example of undue hardship in this context is being forced to reduce other essential spend in order to purchase a service’).[1] Of course, the same amount of money spent on a service will have a different impact on various households depending on their budget.

Another way of assessing broadband affordability is looking at how the price of broadband varies across the country and how the affordability is affected by income and deprivation. To this end, we decided to compare monthly tariffs consumers have to pay to get the entry level (cheapest) broadband available where they live and how this cost relates to the average household income in the area as well as the quality of broadband they would get.

We conducted our analysis at the level of LSOA (Lower Layer Super Output Area), a geographical unit used by the ONS to report small area statistics. Each LSOA contains between 400 and 1,200 households, so it is a small enough unit at the right level of granularity to reflect the differences even within the same cities, towns and rural areas. There are currently 34,753 LSOAs in England and Wales.

Methodology

For this analysis, we used residential broadband tariffs marketed by ISPs in December 2021. Broadband services with the lowest available monthly subscriptions that consumers can access in every LSOA, irrespectively of broadband technology, were the basis of our comparison[2].

A lot of these tariffs came with a minimum commitment – 12, 18 or 24 month contracts. This reflects the reality that most households will sign up for a fixed term contract to get a better deal. The subscriptions included phone line rental, where a phone line is required. Installation, activation and equipment charges were not included, although many of the ISPs waive these one-off charges. Installation of broadband services tends to bear especially high cost in rural areas though some consumers can get the cost subsidised by the Government under the Gigabit Broadband Voucher Scheme.

The lowest available monthly broadband tariff was identified based on the presence of particular ISPs in every LSOA. In turn this was based on the ThinkPoint broadband availability dataset containing data from 1.7 million postcodes[3]. The detailed pricing data at the postcode level is available to our customers.

The relative cost of broadband was calculated against the net household income before housing costs, reported by the ONS for the financial year ending 2018 (the latest available) at the MSOA level[4]. Since no income data is available at the LSOA level we assumed all LSOAs in the same MSOA had the same average household income.

Entry level cost of broadband and what consumers get for it

We found that as of December 2021, the lowest available monthly cost of broadband across England and Wales varied from £11.75 (a FWA service from Reeth) to £39.99 (an FTTP plan from KCOM). The Reeth service came with unspecified speeds while KCOM’s FTTP package offered up to 100/30Mbps (download/upload). Both services included unlimited data allowance.

Entry level monthly cost of fixed broadband by LSOA, December 2021

Figure 1. Entry level monthly cost of fixed broadband by LSOA, December 2021. Source: Point Topic.

 

Some entry level broadband services in other LSOAs, however, came not only with modest speeds but also with significant limitations on monthly data usage, with 10GB, 20GB, and 40GB data caps in some instances. (We excluded a couple of broadband plans with 5GB and lower data allowances as, realistically, they would not be likely to meet today’s internet usage demands).

Table 1. Lowest cost broadband providers, speeds and data caps in different LSOAs (December 2021)

ISPTechnologySpeed (down/up), MbpsData allowanceEntry level monthly tariff, GBP
ReethFWAN/AUnlimited11.75
KijomaFWA40/220GB13.99
Fibre Nest PersimmonFTTP10/1Unlimited14.00
RelishFWAN/AUnlimited14.00
Relish SwindonFWAN/AUnlimited14.00
Pure FibreFTTP5/1Unlimited15.00
Tove ValleyFTTP30/ N/AUnlimited15.00
6G InternetFWA40/10Unlimited15.99
GNetworkFTTP150/50Unlimited16.50
brskFTTP100/100Unlimited16.67
Community FibreFTTP75/75Unlimited16.88
ZoomFWA15/140GB17.00
VFastFWA24/110GB17.50
VodafoneFTTC36/9**Unlimited19.50
FibrusFTTP150/50Unlimited19.99
HyperopticFTTP50/5Unlimited20.00
InternettyFTTP100/100Unlimited20.00
TalkTalkFTTC36/9*Unlimited21.00
Green CoFWA17/2Unlimited22.00
Wight FibreFTTP100/100Unlimited22.95
GigaclearFTTP300/300Unlimited24.00
Hi WiFiFWA10/220GB24.00
TalkTalkADSL20/1*Unlimited24.95
OFNLFTTP40/10Unlimited25.00
Wessex InternetFWA30/5Unlimited25.00
BTADSL20/1*Unlimited27.99
BTFTTC36/9*Unlimited27.99
BTFTTP50/10Unlimited28.99
QuicklineFWA10/5Unlimited29.99
SkyGFAST145/27Unlimited35.00
KCOMFTTP100/30Unlimited39.99
* theoretical max speed

 

 

 

 

Broadband cost as a proportion of income

While the entry level monthly price of broadband was £20 or less in 67% of LSOAs, comparing it to the household income reveals more nuanced differences between parts of the country. Households in many areas of the Southwest, Northeast and Northwest of England as well as in Wales would have to spend a much larger proportion of their net income on entry level broadband services, compared to other areas. On the other hand, the relative cost of broadband is especially low in most of the Midlands and the Southeast, where the average income tends to be higher. The difference between the two ends of the spectrum – 0.3% versus 2.07% – is nearly seven-fold.

Figure 2. Entry level cost of broadband as percentage on net monthly income before housing costs, December 2021. Source: Point Topic and ONS.

Figure 2. Entry level cost of broadband as percentage on net monthly income before housing costs, December 2021. Source: Point Topic and ONS.

Even within the same region, the differences can be pronounced. For example, in Leicester, which includes six LSOAs where households spend the highest proportion of their monthly income on an entry level broadband plan (2.07%), this figure was as low as 0.5% in some LSOAs. At the other end of the spectrum, in the LSOAs of London borough of Tower Hamlets, this indicator varied from 0.3% (the lowest in England and Wales) to 0.82%.

The average relative monthly cost of broadband at the local authority level ranged from 1.42% of income in Kingston upon Hull to 0.35% in the City of London.

Table 2. Local authorities with the highest and lowest relative cost of broadband (December 2021)

Local authorityAverage entry level cost of broadband as % of monthly incomeAverage net monthly income, GBP
Kingston upon Hull1.422,126
Isles of Scilly1.232,275
Leicester1.121,919
Blaenau Gwent1.052,009
Blackpool1.051,972
Merthyr Tydfil1.042,026
Rhondda Cynon Taf1.022,087
Ceredigion1.012,255
Powys1.012,254
Gwynedd1.012,156
Kensington and Chelsea0.513,694
Crawley0.512,806
Hammersmith and Fulham0.513,503
Camden0.503,473
Mid Sussex0.483,088
Richmond upon Thames0.483,821
Westminster0.473,625
Horsham0.473,057
Wandsworth0.473,788
City of London0.354,858

 

The main reason for such discrepancies is the large income differential between regions, with the lowest household income apparent in the same parts of the country where broadband is relatively more expensive.

Figure 3. Average net monthly income before housing costs. Source: ONS, 2018.

Figure 3. Average net monthly income before housing costs. Source: ONS, 2018.

 

 

Technology and bandwidth

The cheapest broadband services are largely provided over the hybrid fibre-copper infrastructure (FTTC), even though BT and independent network operators are investing heavily in full fibre rollout, with some 9 million premises passed already (as of Q3 2021). Hence we found FTTP to be the cheapest technology in some areas as it is becoming increasingly competitive in terms of cost.

There are also pockets where FWA is the lowest cost technology. This is especially the case in rural areas where competition from wired broadband providers is limited. Although offering low monthly price, FWA services often come with modest speeds and data allowances, and high installation costs. In these areas, households who need more data and higher bandwidth, would have to pay considerably more than the entry level tariff.

Figure 4. Lowest monthly cost of broadband by technology, December 2021. Source: Point Topic.

Figure 4. Lowest monthly cost of broadband by technology, December 2021. Source: Point Topic.

 

 

Overall, with the majority of entry level tariffs being on FTTC, the most common downstream bandwidth available on entry level tariffs is lower than 50Mbps. Highlighting the inequality of broadband access, there are still pockets of sub-24Mbps bandwidth, whether on ADSL or FWA, and a scattering of areas where the FTTP based entry level broadband services come with 100-300Mbps, mostly symmetric, speeds.

Figure 5. Download speeds available on entry level broadband tariffs, December 2021. Source: Point Topic.

Figure 5. Download speeds available on entry level broadband tariffs, December 2021. Source: Point Topic.

Conclusion

One might argue that 2% of net household income spent on basic broadband in the most ‘expensive’ areas may not seem like a lot, but this figure does not paint the full picture of inequality and poverty. In some LSOAs of England for example, up to 61% of the population is income deprived[5], which means that for these households broadband not only becomes even more relatively expensive but the costs may be prohibitive.

For example, according to Ofcom, in 2021 ‘around 2 million households reported an affordability issue with broadband and/or smartphone services <…>, or do not have internet at home partly due to cost.’ Furthermore, ‘the 3.3 million households with the lowest incomes in the UK spend on average over 4% of their disposable income on fixed broadband.’[6] While many of these customers could reduce their bills by shopping around for a better deal, not all of them know how to do it.

To address the issue, a handful of ISPs introduced so called targeted (social) tariffs for people on lowest income which range from £10 to £25 a month. However, currently this is still an exception rather than a rule, and take-up of such tariffs is only 1% of households who are getting zero earnings benefits[7].

In addition, the quality of entry level broadband consumers can access in different areas of England and Wales is variable. Depending on where they live, for £24 a month some households will get a wireless broadband service with 20GB monthly data cap and 10/2Mbps speeds or an FTTP service with unlimited usage and 300/300Mbps speeds.

Furthermore, due to income inequality households in some parts of the country will spend a larger proportion of their income on basic broadband than in others. And, given significant income deprivation of households in some areas, they find it hard to afford even basic broadband.

Meanwhile the importance of ‘decent’ broadband access has become highlighted by the Covid-19 pandemic and it will become more and more of a necessity in many areas of daily life, from flexible working to education and healthcare. The need for levelling up today’s vital infrastructure could not be overestimated.

Get in touch

The complete dataset used to produce this analysis is part of our UK Broadband Mapping at postcode level and UK Plus services. For more information see https://point-topic.com/our-services/thinkpoint/ and https://point-topic.com/our-services/uk-plus/

To find out more you can contact us on 020 3301 3303 or e-mail [email protected] 

 


[1] Affordability of communications services, Ofcom, July 2021.

[2] We excluded mobile and (public) Wifi technologies but included FWA (fixed wireless access) platforms.

[3] We acknowledge this is not a complete record, and some smaller ISPs may have been missed. Nevertheless, our analysis is based on 88 broadband providers, which is a significant proportion of the UK ISPs.

[4] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/datasets/smallareaincomeestimatesformiddlelayersuperoutputareasenglandandwales

[5] The Ministry of Housing, Communities & Local Government describes Income Deprivation as measuring the proportion of the population experiencing deprivation relating to low income. The definition of low income used includes both those people that are out-of-work, and those that are in work but who have low earnings (and who satisfy the respective means tests).

[6] Affordability of communications services, Ofcom, July 2021.

[7] As above.