Extract A: Ofcom report into the UK residential broadband market

An investigation by the telecoms regulator Ofcom into the residential broadband market concluded that consumers have been overpaying by £1.5 billion a year due to high "loyalty penalties" charged to out-of-contract customers and complex exit procedures compared to what would be expected in a fully competitive market. It found that 55% of broadband subscribers have remained with their existing provider for over 5 years. These customers could save around £180 a year by switching to a different network, but consumer inertia remains high due to the perceived hassle of coordinated cancellation.

However, Ofcom found no explicit evidence of collusive pricing among the dominant major providers (BT Group, Virgin Media O2, and TalkTalk). Furthermore, digital "altnets" (independent fiber networks) have expanded rapidly, achieving a combined market share of 18% in high-speed residential connections.

To stimulate market dynamism and protect consumers, the regulator has implemented measures to open up and increase competition in residential broadband. These include:

• the launch of the 'One Touch Switch' (OTS) system, allowing customers to switch between any broadband networks (including those on different physical infrastructures) by contacting only their new provider, who manages the entire transfer within 24 hours
• mandatory 'End-of-Contract Notifications' (ECNs), forcing providers to alert customers via text or email when their contract is ending, explicitly stating the price increase and detailing the provider's best available deals
• a regulated price cap on 'social tariffs' to ensure low-income households and vulnerable consumers have access to affordable, high-speed connectivity.

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