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Ofcom may take action on increasing line rental prices
Thursday 01 December 2016 09:51:18 by Andrew Ferguson

With the broadband USO going through the slow process to law it seems a good time to review things like the pricing of phone lines for those that don't have a broadband service and particularly the elderly and vulnerable.

Ofcom has announced a consultation on a landline price review, regular readers will know that in the past when line rental pricing was visible we would often highlight when it rose in price that the wholesale element had remained steady or had dropped. An additional point is that some operators have reduced the care level applicable (in this case it means repairs may be a day slower) to phone lines they rent, thus saving a small amount of money per line while in many cases the retail line rental price still increased.

The email sent out at 7am today contained the paragraph 'The consultation relates to wholesale prices that BT can charge other telecoms providers to offer homes and businesses a telephone service over its copper network. We are seeking views on our proposed wholesale regulations by 28 February 2017' which seems a little odd given the downward trend in wholesale costs, but the full article suggests that an across the board price cut at wholesale or enforced margin rules at retail are not under consideration but rather 'Ofcom’s review will establish whether measures are needed to protect this group of customers. We are now analysing the market in detail and, depending on our findings, we expect to publish a consultation in early 2017.

The existing telephone USO means BT provide a Basic Telephone and broadband product with means testing for those on the lowest incomes, and at £5.10/m (including £1.50 of call allowance) this is below cost (£7.22/m + VAT), so one option may be to extend the group eligible for the product. Though at a time when the telecoms market is undergoing potentially massive upheaval the BT Group may not be keen to shoulder the full responsibility.

Comments

Posted by 961a 5 days ago
Ofcom continues to wade it's way through the mess that it creates. Having encouraged the landline price to disappear so that an increase in the landline price element is totally opaque to the customer, it now wants to start to think about wholesale pricing. Urghhh!!!

Full page ad in the Sunday press from one of the big boys saying "we've got rid of line rental charges"

Send for the men in white coats!
Posted by TheEulerID 5 days ago
@961a7

Firstly the change to the way costs of packages are presented is the work of the ASA, not Ofcom. Secondly, the trend to increased landline charges long predates the ASA's latest rules on package pricing with broadband so it clearly can't have had any impact on the issue until a couple of months ago.
Finally, this consultation is about those buying voice services alone, so the ASA rules on bundle pricing with BB don't even apply.
Posted by csimon 5 days ago
Maybe the group could be extended to those who have no mobile reception at their house, so they need a landline regardless of whether they have broadband or what type of broadband it is.
Posted by csimon 5 days ago
The other side of this coin is the idea of broadband & line rental actually being two separate products that you should be able order individually from different providers, either for reasons of getting the cheapest deal or a combination of packages better suited to yourself. High standalone line rental prices penalises people who want that choice and the recent rules about bundling line rental into broadband prices further undermines that. Tehy tackled the wrong problem, exacerbating anti-competitive bundling to make getting a component from another provider more expensive.
Posted by csimon 5 days ago
PS. There is no reason why FTTP broadband in particular should be tied to a landline contract, but BT require you to do so, I can't see anything on their site about standalone FTTP.
Posted by mklinger 5 days ago
Don't hold your breath waiting for ofcom to do anything usefull. Line rental has continued to go up well in excess of inflation. Perhaps it could consider giving a discount to those that can't get superfast broadband. I'm in the process of changing phone and broadband. The phone will take 14 days to change but the broadband a month why can't they change at the same time ? so much for the digital age !
Posted by JNeuhoff 3 days ago
@Steve Jones: While this is indeed about line-rental and voice telephony, it is obvious that over the past few years the price rises for line rentals, and even to voice telephony services, have been way above inflation rates. Especially considering the fact that wholesale line rentals haven't risen. It is about time to charge realistic prices for line rentals to end customers.
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