Broadband News

Class action suit filed over prices BT used to charge for line rental

A class action suit which is suggesting compensation of around up to £500 for some 2.3 million current and past BT Consumer customers has been filed.

The claims of customers directly harmed by BT’s exploitative behaviour are precisely the type of claims the collective actions regime is designed to deal with. We hope very much that a settlement can be reached to resolve them in line with BTs acceptance of the need to avoid overcharging when investigated by Ofcom.

Rob Murray partner of Mishcon de Reya who is representing Le Patourel and CALL (Collective Action on Land Lines)

This relates to the retail price paid for voice line rental between 2009 and 2017, and in 2017 Ofcom forced BT to lower its retail line rental package by £7/m at a time when the retail price was hovering around the £19 to £20/m mark. Ofcom did not impose any requirement on BT Consumer to compensate consumers and BT did not offer to compensate customers either. This timeframe was during a period when wholesale line rental costs dropped by almost a quarter but retail prices kept increasing, though the bundling of things like evening and weekend calls along with changing call habits will have had an impact but based on the work Ofcom did they clearly thought BT was overcharging in cases where people had a voice service and no broadband.

The promise of potentially £500 compensation for overpaying will appeal to many but we have some reservations about compensation delivered this way, it would be a lot better if compensation was to be paid out directly by BT rather than people having to register their details on https://www.callclaim.co.uk/ 

The damages being sought are for charges paid from 2015 and the range of damages sought is £200 to £500, but we do not know whether the costs of the legal action will be taken from any damages that are paid by BT if the claim succeeds or whether BT will have to pay those costs on top of the damages to individuals.

The court case is complicated by the fact that while Ofcom forced BT to lower its retail line rental, others were charging very similar amounts for the monthly line rental even when using the same WLR product and providers with no link to the BT phone network also charged similar. If a big name such as Virgin Media was charging just £10/m for voice line rental during the period any court case would be a lot simpler.

The forced reduction by Ofcom on BT did seem to create a ripple effect where things like Evening and Weekend call bundles stopped being thrown in for free and started to be add-on items and other elements of call pricing shot up in price. The old fashioned standalone voice market is an important one for those who have not embraced the online world and the big danger now is that headline pricing is going to be low but as soon as people make calls outside any call bundle the costs will be eye watering.

This is a specialist claim that will be heard before the Competition Appeal Tribunal. It is a classic example of a loyalty penalty, which were the subject of a super complaint by Citizens Advice, due to their harmful effects on consumers. It will take time to gather evidence and bring it to trial, but we are very confident that eventually millions of BT's most loyal customers – many of whom are older and potentially vulnerable – will receive a significant rebate.

Natasha Pearman of Mishcon de Reya who is representing Le Patourel and CALL

While the issue can be called a loyalty penalty, with the way other WLR sellers would follow any BT price rises i.e. when BT Consumer would increase its price by 50p a month you would invariably find the others doing same when in a competitive market where the core wholesale cost was going down you would have expected the competitors to hold their prices steady and make a big noise about this to customers and in the consumer press to tease more customers away from BT. This claim while focused on BT in deciding whether compensation is due will need to look at the wider market and also how decades of regulation have got us to this point.

Comments

"where the core wholesale cost was going down you would have expected the competitors to hold their prices steady and make a big noise about this to customers and in the consumer press to tease more customers away from BT"

That's the problem. For the demographic under consideration, they'll not even consider changing their phone service from BT, the same as they won't consider changing their gas supply from British Gas. The competitors know this.

Also the high rental allowed headline-grabbing offers like "free broadband" or "broadband for only £3 per month"

  • candlerb
  • about 1 month ago

So called UK Telco "Line Rental" charges have long been a racket overlooked by OFCOM and equally long overdue to be dropped entirely rather than the current practice of it being masked masked/hidden in "Bundle Packages".

Before they came about, VM's "Line Rental" had crept inexorably upwards from the <£10 of over a decade ago to nearly £20 before seemingly disappearing into a "Bundle Package" a few years ago.

  • bonematrix
  • about 1 month ago

It seems that any commercial enterprise with the appellation "British" in front of it is going to be a duplicitous and exploitative undertaking, and should therefore be avoided.

  • Blognorton
  • about 1 month ago

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