Cost-of-living crisis drives UK consumers to rethink connectivity needs

Following a digital home boom established during Covid-19 lockdowns, consumers are retreating on connectivity as they prioritise financial and mental wellbeing, with a potential knock-on effect of efforts to break the digital divide turning into a stalemate, warns a report from EY.

The report, Decoding the digital home, interviewed 2,500 households in the UK to explore how the pandemic, the cost-of-living crisis and evolving connectivity needs are affecting how comfortable consumers are in the digital home which, since the pandemic, has increasingly been a de facto part of the extended enterprise.

The top-line findings were that as UK economic growth is under threat as inflation rises, the cost-of-living crisis is not set to disappear, with further pressure on consumers to afford rising broadband prices. EY called on broadband service providers to help their customers by making packages easier to interpret and understand, and clearly detail the value they are providing to consumers.

In the survey, just more than three-fifths (61%) of UK households expressed concern that their broadband provider would increase subscription rates. As the UK emerges from the pandemic, the study also indicated that digital usage is normalising, with many looking to downsize their online exposure. Some 35% said they plan to spend less time online, 27% want to cut the number of streaming platforms they use and 24% are open to reducing the number of connected devices in their home.

The study also highlighted that consumers feel service offerings are too complex. Just over one-third (35%) found it difficult to understand the digital home packages on offer, and 40% saw very little difference between competing providers. Similarly, while more than half (49%) of consumer respondents said introductory offers play a role in their supplier choices, 54% indicated that these make it difficult to determine who offers the best value.

At the same time, 62% of UK households believe broadband reliability is more important than speed – the highest score across all countries surveyed. This, said EY, underlined the importance of new types of performance guarantee for customers.

Assessing the trends revealed in the study, EY said that while for the past few years, investing in the UK’s digital infrastructure has been a priority for the government and service providers alike, slowing demand will naturally impact investment. Praveen Shankar, managing partner for EY UK & Ireland Technology, Media and Telecoms, said this could have the potential knock-on effect of putting efforts to break the digital divide into a stalemate, further impacting people’s ability to play a role in our increasingly digital-led society.

“With UK economic growth under threat as inflation rises, concerns around price rises for digital services – from broadband to streaming platforms – are pushing consumers to cut back on the digital services they use,” he said. “It is essential now that service providers reframe their strategies to build long-term value for UK consumers and offer compelling propositions that are flexible and reflective of the financial pressures people are facing.” 

Adrian Baschnonga, global technology, media and telecoms lead analyst at EY, added: “Connectivity and content providers must make their packages easier to interpret and understand. Clearly underlining the value they offer is essential during a period of unprecedented pressure on household spending. Better levels of service and support will also help companies build more trusted and enduring relationships with their customers, reducing the risk of churn.”