Social tariffs - How are they funded?

[#1]

I noticed when renewing my service agreement there are 'Social Tariffs' available for a couple of pounds cheaper per month.

I'm intrigued how the difference was accounted for c.f. a Normal tariff. Possibilities I can think of are:-

1. The difference might be set against profit so the Shareholders receive a reduced dividend.
2. It may be a cost line added to the non-social Tariffs (Stealth tax).
3. Maybe the Gov provide a grant direct to suppliers?

Does anyone know?

Rgs

Simon

[#2]

Same socialist mindset applies to "social" electricity costs, which are subsidised by the rest of us
"Eligibility for social electricity tariffs often includes:

Individuals receiving means-tested benefits (e.g., Pension Credit, Universal Credit)
Households with higher energy needs due to health issues or family size
Low-income households not receiving benefits may also qualify, depending on the supplier's criteria

[#3]

It is 1 - the broadband providers bear the cost (or reduced profit depending on costs & profit margin)

There will be an indirect impact on other customers, as the price they pay will cover the ISP's costs & profit. That's similar to how existing customers "pay for" the vouchers and incentives offered to new customers.

Not all ISPs offer social tariffs - e.g. Plusnet and EE don't, but BT does.

[#4]

There is a bit more to it than who pays.

It's a discount if the buyer would have bought a more expensive product from you but it's extra income if they wouldn't have purchased a service otherwise.

Some suppliers also sell a lower quality (or speed) service, Virgin Media's "Essential Broadband" is slower than their other offers.

Ofcom want's the social tarrifs to exist and by various means suppliers are "encouraged" to make a suitable offer.

https://www.ofcom.org.uk/phones-and-broadband/saving-money/social-tariffs

[#5]

Whichever way you slice the cake, someone else is picking up the tab.  Moving data costs money.  Virgin has a sound approach here, all social tariffs should be the minimum required to do the essential things, such as email and accessing government websites.