Warning over AI that could set UK broadband prices

Ofcom has flagged a risk that AI could let UK telecoms providers price customers on their inferred willingness to pay.

The regulator raised the concern in a report on AI in broadband and mobile markets, published on Friday (25 September).

Ofcom said some stakeholders see AI as a key enabler of hyper-personalised pricing, where providers tailor offers and prices to individual customers.

Providers could build these offers by combining a customer’s usage data and billing history with customer service transcripts, property type and household details.

Ofcom said highly targeted offers could make it harder for customers to judge whether they are getting good value.

It warned that this could lead to inertia and weaker competition, because customers would struggle to compare deals, negotiate or switch.

Pricing algorithms and collusion

Ofcom also said pricing algorithms could produce coordinated outcomes between providers, which it referred to as algorithmic collusion. It said this could mean weaker competition and higher prices.

The regulator said AI-driven decisions could also reinforce existing inequalities or produce discriminatory outcomes where they rely on biased data.

Ofcom gave the example of a disengaged customer who applies for a mobile contract and receives a personalised price without knowing how the provider calculated it.

In that example, the customer cannot tell whether other re-contracting customers received better value. They also struggle to reach a human agent to negotiate.

Some customers could pay less

Ofcom said hyper-personalisation could also lower prices for some customers, including those with less ability to pay.

Average prices could fall if personalised offers lead to more intense competition between providers, the regulator added.

Providers remain cautious

Virgin Media O2 already uses AI-enabled marketing that draws on real-time and historical data to target customers with personalised offers.

Ofcom said providers know that AI predictions about customer needs can be unreliable. It added that they appear cautious about relying heavily on those predictions when deciding what to offer.

Participants in Ofcom’s research said negotiating with a human lets them use factors such as loyalty to secure a better deal.

Ofcom’s 2020 work on personalised pricing found that people had concerns about its fairness that could affect trust in telecoms markets.

The Competition and Markets Authority published a paper on AI and algorithmic collusion in March 2026.

Ofcom said it will not introduce new rules for now. It listed transparency, accountability and discriminatory outcomes among the challenges it expects AI to raise soon.

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