UK broadband loyalty penalty costs households up to £108 a year

An independent BroadbandSwitch.uk report says UK broadband customers out of contract pay £7 to £9 more a month for the same service, while most eligible households still miss out on social tariff savings. The study says the gap is narrowing, but millions still face higher bills for staying put.

Why it matters: - Millions of UK households are paying more for broadband even when they use the same service as nearby customers. - The report says the extra cost can reach £108 a year for households that drift out of contract. - Unclaimed broadband social tariffs could leave £824 million in support on the table each year. - Lower-income and older households are more likely to feel the hit because they are less likely to switch and more likely to stay on older, slower lines.

What happened: - BroadbandSwitch.uk published The Loyalty Penalty on July 22, 2026. - The report measures broadband overpayment in one place for the first time, using data from Ofcom, Citizens Advice, INCA, Point Topic, and audited results from BT and Virgin Media O2. - The study found that customers out of contract pay £7 a month more for standalone broadband, £8 more for a broadband and landline bundle, and £9 more for broadband with TV. - The report is free to read at the full report.

The details: - At the end of June 2025, 28% of UK broadband customers were out of contract for at least one service in their bundle. - Ofcom says most of those customers, but not all, could save by switching or re-contracting. - On broadband and landline bundles, the monthly gap ranges from £4.17 on a standard package to £7.94 on an ultrafast package. - That price gap works out to about £50 a year, £82 a year and £95 a year by tier. - Average standalone broadband prices fell 6% in real terms across the five speed tiers in the year to July 2025. - The slowest sub-30 Mbit/s packages rose 17% in real terms, or 22% in cash terms, even as other tiers got cheaper. - Those slower packages are often tied to older copper lines and are held disproportionately by older households. - Broadband social tariffs typically cost £12.50 to £20 a month. - Eligible households on social tariffs save about £200 a year. - In June 2025, 532,000 households were on a social tariff, equal to 8.6% of the roughly 6.2 million eligible households. - Ofcom found that 70% of eligible households did not know the tariffs existed. - Citizens Advice estimated that £824 million of support goes unclaimed every year. - Dr. Alex J. Martin-Smith, founder of BroadbandSwitch.uk, said the report includes the social tariff section to help households most affected by the penalty.

Between the lines: - The report suggests the loyalty penalty is becoming smaller, but it is still concentrated among households least able to shop around. - Just 19% of over-64s switched a communications service last year, compared with 29% of people ages 25 to 44. - Only 21% of DE households switched, versus 27% of AB households. - Low-income households already face a poverty premium averaging £217 a year across essential markets. - BroadbandSwitch.uk says the out-of-contract pool has fallen from 40% in 2019 to 28%, and switching has risen from 14% to 18%. - BT’s consumer broadband average revenue fell 1% to £41.80. - Challenger fibre networks added around 850,000 customers in 2025, while Openreach lost about 860,000 lines. - Ofcom banned inflation-linked mid-contract price rises in new contracts on Jan. 17, 2025. - Any increase now must be stated in pounds and pence before a customer signs. - The last round of the old inflation-linked increases worked through legacy contracts in April 2026.

What's next: - The report urges customers to check when their contract ends, because providers must tell them. - Households receiving Universal Credit or Pension Credit are told to check broadband social tariffs first. - Customers on old, slow packages are urged to compare deals at their address, since full fibre reached 82% of UK homes by January 2026 and often costs the same or less for far faster speeds. - BroadbandSwitch.uk says the report is Report No. 28, runs 27 pages, cites 35 named primary sources, and grades every figure by evidence strength.

The bottom line: - The broadband loyalty penalty is still costing UK households money, but the biggest immediate savings appear to come from switching, re-contracting, or moving eligible customers onto social tariffs.