Inflation busting price rises at BT Consumer division
While a lot of coverage on the BT Consumer price rises appears to be aimed at the spending on BT Sport, BT Sport is just one small part (though highly visible) of what the BT Consumer arm are doing. If there is any anger over the price rises, it should actually be at the collective lack of competition from the largest phone and broadband providers, where pricing seems to be converging and the trend each year is for BT to increase their price and others to increase to within an ever closer margin.
The price rises for BT Retail/Consumer customers take effect from 1st December 2014, and if you are in a contract and the price rises affect you then you should be able to exercise your right to exit a contract without penalty. The main changes are (they all take effect on 1st December 2014):
- Voice line rental increasing by £1/month to £16.99 as of 1st December 2014
- Line Rental Saver will increase from £159.84 per year to £169.90 per year (equivalent of £14.16 per month.
- Call set-up fees for chargeable calls will increase from 15p to 15.97p
- Calls to landlines will increase from 9p per minute to 9.58p
- Early Contract Termination charges (when you leave while in contract and it is not because of price rises) are changing, details on the BT website
- Broadband prices to go up by up to 6.49%, but we are yet to see full details
- BT Customers can find out more and information on when they will be notified here
Quick chart shows difference in trends over time of wholesale vs consumer in line rental. Competition failure? pic.twitter.com/YVN7Wb4MOR— thinkbroadband.com (@thinkbroadband) August 23, 2014
As you can see from our twitter feed, we have looked back over some years and the retail pricing of voice services is diverging from the wholesale pricing. This is probably down to a number of factors, such as increasing use of call bundles by consumers and the rise of line rental saver options, the number of freebies, e.g. WiFi access, BT Sport, Parental Controls, cloud storage, free YouView set-top boxes and all the other costs of running a business that have not gone down in the last few years. While it is very easy to suggest that the extra revenue will (1) pay for more fibre roll-out or (2) repay some of the BT Sports costs, this raises the question why are operators like Virgin Media who are totally independent of Openreach pricing increasing their line rental too and the trends suggest the margin between the big providers is decreasing?
The real answer is that the market is charging what the market can get away with, both by us the consumers not always shopping around and changing voice/broadband providers and a regulator in the form of Ofcom that is balancing the wholesale pricing but seems to be ignoring a retail market where it is almost impossible to get broadband without taking voice line rental from the same major provider now.
For those really struggling financially, if you are on Income Support, Income based Jobseeker's Allowance, Pensions Credit, Employment Support Allowance or Universal Credit take a look at BT Basic which provides voice line rental at £15.30 every quarter (includes £4.50 calls allowance) and an ADSL2+ service with 10GB usage allowance for £4.85 per month (includes access to WiFi when out of the home). The Basic service is provided as part of the USO obligations imposed on the BT Group.