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Are landline price rises fair?

landline

Ofcom has announced that it’s going to review the market for standalone landline telephone services, as it’s concerned that some customers aren’t getting value for money.

Chances are you probably won’t be affected by Ofcom’s review, as many people now have a bundled telecoms package (landline, broadband and TV). But, you may very well know someone who is – particularly if they’re elderly or vulnerable.

Ofcom believes the increase in line rental charges for people who buy landline-only services disproportionately affects these groups, as they are more likely to take a landline without other services. It’s also more likely that they’ve never changed suppliers.

Landline charges

Data from the regulator shows that every major landline provider has put tariffs up significantly in the past few years, some as much as 41%. And that’s despite the fact that wholesale prices for providing the lines have fallen.

Ofcom has found that BT and Virgin Media charge the most for line rental, closely followed by Sky and TalkTalk.

While the regulator doesn’t have competition concerns about bundled telecoms packages, there is a real worry that there are a sizable number of consumers out there who aren’t getting a fair deal if they’re paying solely for a landline service.

In fact, it’s reported that around 2.7 million households only have a landline, with no access to other means of communications, such as broadband for email or a mobile phone. This was backed up by a convo we ran in the summer, when we asked if you think your landline is still a lifeline, considering the rise in mobile phone usage.

And for people like Alan, it definitely still is. He told us:

‘Those of us living in the countryside (less than four miles outside of a town) have to suffer the problems of totally rubbish broadband speeds and also virtually nil mobile phone (unless you want to hang out of the window waving your mobile around). So for millions of us the landline is invaluable and will be for a long time yet as the telecoms industry is only interested in urban areas.’

Next steps

The regulator has started its investigation and opened a consultation, which will close at the end of February.

Which? welcomes this move from Ofcom, and will be looking to help it during its consultation in whatever way we can.

So, do you have a landline-only service, or do you know anyone who does? What do you think to landline-rental charges? What should Ofcom consider in its consultation?

Comments
Profile photo of william
Member

I’ve long held the view that those of us choosing a single item are penalised for not being a good little cash cow.

Member

I’m always reminded of a friend of mine who had his landline, internet and mobile all in one package. When he tried to switch providers his old provider cut him off a fortnight early so he was without any form of communication for those two weeks.

It might not have been so bad had he not been self-employed.

Profile photo of duncan lucas
Member

While William could have a point the question arises -what is the biggest source of maintenance expenditure ? . It isnt broadband maintenance allowing TV and other resources to be used but the maintenance of a telephone landline , I should know I worked repairing them for 19 years , it is labour intensive . Long ago there were big storms in the London area pulling down BT equipment-poles etc to repair them many BT engineers were drafted in from various parts of the British Islands it took a while to do . Now BT is VERY understaffed due to government action which slyly forced BT to employ private contractors -Exactly what HMG wanted , so my question is the same as the issue over fibre -FTTP -WHO PAYS ?? AND if another storm occurs in London its going to be in serious trouble because of lack of engineers . This isnt just me saying that there is a “big kick up ” in telecommunications circles about this going on just now. Okay lets hear the SOLUTIONS ?

Member
D Batki says:
8 December 2016

Thank you for the reasons for the charges for land-lines. Why does BT continue to use poles in many streets? Why has the company not invested in Fibre Optic lines ? I am a Virgin Media customer who pays the extra for the landline rentals because the Mobile service can be unreliable in the Cotswolds.

Profile photo of duncan lucas
Member

D Batki -if you are a Virgin Media customer you will not be using BT underground cables/ducting–they have their own , Virgin Media have their own co-ax and Fibre cables so if you are paying extra for your landline its not BT,s fault but Virgin,s . BT continues to use poles because they have already outlayed vast sums of money for their installation , do you know it requires a gang of men + a hydraulic crane + a mechanical digger just to install one pole , do you know how much that costs ? Now just imagine iof BT had to dig up EVERY street in Britain to install underground cable , not just that but you are talking Direct Feed that means EACH house in Britain would need to be individually dug up through their gardens PLUS how do you get Wayleave to go through other peoples gardens/ land ? think of the cost ,it would be Hundred,s of BIllions –several £100 BILLION pounds , what you are advocating is not possible given the liabilities of BT , why not ask the IMF for the money or the WB etc or a certain Billionaire-GS ? Can you see other companies using BT ,s network by piggy backing it to contribute the odd £10 Billion or so ?? — I dont.

Profile photo of k420360208
Member

I totally agree with Duncan Lucas I did 39 years with BT and all it came down to was cutting the costs and one of the best ways to do it was by getting rid of all the experienced telecoms engineers who knew the most about how the network functioned when I started with the GPO my particular group had about 30 engineers in the area we looked after, when I left my group was down to 4 to do the same amount of work.

Profile photo of John Ward
Member

I think this review is well overdue. Not only have the landline-only prices of the major telecom service providers risen continuously over recent years but they have converged so that there is no effective competition on price. Moreover, the gap between the consumer charge and the declining wholesale cost of landline provision has widened considerably for no apparent reason other than an unfounded contention that providing a landline service is uneconomic without add-ons like broadband. I somehow don’t suppose I shall require a broadband service all the way until the end of my life and that a landline-only service would eventually be sufficient; this could be the situation for large numbers of people so tackling this overpricing, and challenging the justification for it, are essential.

Profile photo of malcolm r
Member

I wonder how much the increase in landline rental costs is due to the huge loss of income from landline phone call charges. Many use mobiles of course, and many others have free calls included in the rental. Would we prefer to pay for all landline calls as we used to and have lower line rentals?

Profile photo of John Ward
Member

There is obviously a correlation, Malcolm. Hopefully the Ofcom review will discover whether it is fully justified.

Personally I would like to have the option of a smaller standing charge [line rental] and a pay-as-you-go tariff for the use of the line.

Profile photo of malcolm r
Member

As with mobiles, and energy prices, there could be a choice – landline with call allowance, or pay for each separately. The one to choose would depend upon your usage. I expect the use of the words “standing charge” will raise some hackles :-). As will “choice” when some might pay less than others. Still, we’re in the season of goodwill to all persons.

Profile photo of duncan lucas
Member

PAYG for line rental John ?? I take it that means if a fault occurs on the line you pay the full business generated price for a call-out to fix it , have you any conception how much that would be ? -£1000,s yes £1000,s . I can list all the departments involved and there are many , van/engineer / control staff/ exchange staff/ materials -do you know the cost of UG cable for example ? This is what I am getting at if US control takes over BIG bills or -we cut you off.

Profile photo of malcolm r
Member

We were suggesting that landline rental could be reduced and pay separately for calls as one option.

Profile photo of John Ward
Member

That’s not what I meant, Duncan. Line rental would be a standing monthly or quarterly charge at a universal set rate but if you use the line to make telephone calls, or for a broadband service, there could be a metered PAYG tariff and the price per minute would be chargeable by a tariff formula that could be flat rate, or by time of day, or by packets, or a bundled monthly allowance, or any other combination so that subscribers could choose the best deal for their circumstances.

Under the contract with your telecom service provider they would be required to compensate you for any outage or downtime of the rented line so they would have an incentive to get it fixed by the infrastructure provider [usually Openreach] as quickly as possible. This is a simple proposal and no US takeover is contemplated.

Profile photo of wavechange
Member

Elderly and vulnerable people who need a low cost way of keeping in touch have the option of BT Basic: http://btplc.com/inclusion/ProductsAndServices/BTBasic/Whatdoyouget/index.htm One of the biggest problems with landlines is the cost of calls to mobiles.

Profile photo of duncan lucas
Member

Thats good advice Wavechange.

Profile photo of malcolm r
Member

The BT initiative (do other call providers give the same service? I haven’t looked) is the sensible option for those on benefits. The way to deal with mobiles is to phone the mobile holder and ask them to ring you back; that is what our family do with us as they are all on contracts with free calls – and we aren’t!

Member

Ofcom’s changes to mobile termination rates in April 2016 mean that calling a mobile number should cost no more than calling a non-geographic 03 number. Most landline providers now offer inclusive calls to mobile numbers on their anytime call plans.

Around £8 per month secures unlimited anytime calls to numbers starting 01, 02, 03, 071-075 & 077-079 (as long as each call is no more than 59 minutes long). Calls to numbers starting 080 are free.

Gone are the days of paying a per-minute rate for individual calls. For most people, this anachronism has been consigned to history. Anyone paying for calls by the minute and paying a total of more than £8 per month is clearly on the wrong call plan.

Profile photo of duncan lucas
Member

One question Ian- does it apply to BT ? as its hasnt up until now.

Member

Does what apply to BT?

Everything applies to all landline and mobile providers. There are no special rules for BT retail call prices. Those were eliminated a long time ago (01 and 02 in August 2004 and 084, 087, 09 and 118 in July 2015). There never were any special BT retail pricing rules for calling mobile numbers starting 071-075 and 077-079.

BT are conspicuous in being the only major landline provider to not yet offer inclusive calls to mobile numbers. PlusNet, Sky, TalkTalk, Virgin Media and others already do.

Profile photo of duncan lucas
Member

Your last sentence Ian – that answers my question -ergo- it doesnt.

Member
bishbut says:
9 December 2016

Other than Virgin all land line providers have to use BT landlines so when charges go up it is BT who makes more money The many phone providers are controlled by BT BT has grown to big must be broken down into small parts or operations BT seems to control everything regarding phone and broadband operation

Profile photo of duncan lucas
Member

Sorry Bishbut -totally disagree with that. You are looking at it from a predator point of view that would have the boardrooms of Vodaphone/VM/SKY/etc all clapping their hands and ripping off the profitable parts and destroying a vital public utility as well as a security concern . What other country would sell off its network infrastructure ? only one which doesnt care about the long term security and losing a vital resource to foreigners. There have been revolutions when some countries try to sell off their “Crown Jewels ” you would think the intelligence in this country is a bit higher than that and not be so stupid . Only rival shareholders or those with financial gain would want a country to sell its soul to a Hedge Fund which if you check up are mostly -owned /run by America or how about off-shore companies – nice people ? .

Profile photo of StephenHicks
Member

It is in my view sneaky marketing by ISP’s. Low headline broadband charges but higher line rental charges.

Now that ISP’s have to quote an all inclusive price we can see the REAL price of broadband,

Profile photo of malcolm r
Member

I’m not sure about this. When the landline price and the broadband price were shown separately there was transparency. Now the two are wrapped up together that has gone.

Profile photo of StephenHicks
Member

If you only wish to purchase a line rental it is of course clearly identifiable.

I think it is a good that ISP’s have to quote an all inclusive price for broadband.

Member
shahzad says:
9 December 2016

The land charges are simply rip off by ISPs companies(BT) .The consumers simply have very little or no choice to avoid while these companies pocketing millions. The OFCOM needs to bring reforms into telecom industry fast by splitting big Giant .

Profile photo of duncan lucas
Member

How about splitting up “Big Giant ” Vodaphone Shahzad or SKY or Virgin Media or is it only the last British owned Utility you want to sell off to US predators who will “profit skim ” the best parts leaving BT with the expensive to upkeep long network lines ? There is more to this than Yuppie “thinking ” , there is the protection of our Country , the security of our nation and continuance of one big industry in British hands.

Profile photo of DerekP
Member

Landline only – with no broadband, no calls packages, no TV streaming package etc. is probably a shrinking market.

For such a case, classical micro-economic theory would argue that this could increase the marginal costs of supply.

However, I think a more likely reason for recent “41%” price increases would be the restructuring of suppliers’ offerings, to reduce the apparent marginal costs of attractive “extras”, like the examples above.

Personally, I pay Plusnet about £27 each month for landline + broadband. I can readily afford this, but are there any cheaper deals that I am missing out on?

Member

There seems to be a lack of understanding here. The lines that are provided to telecoms operators such as Talk Talk , Sky, Virgin Media, Post Office, BT Retail etc. are provided by Openreach. Openreach provide these lines at a Wholesale price which is the same for all Telecoms operators, inc. BT Retail. Openreach, the part of BT that everyone is saying is so bad, have reduced these prices by 10%-20% between 2010 and 2015. It is the Telecom Operators that have then decided how to price to their customers in order to compete with each other and is nothing to do with BT Openreach !!

Profile photo of duncan lucas
Member

The “Voice of Sanity ” K – I hope your post sinks into those with a vested financial interest in selling off BT or its subsidiaries. Well detractors any comments on “K”,s post ?

Profile photo of John Ward
Member

I fully endorse K’s comments which are indeed a breath of sanity. What continues to muddy the waters is references to selling-off Openreach; the only organisation that could now sell it is the BT Group itself as Ofcom has decided it should remain under the BT Group umbrella. For the reasons that Duncan has stated it would be highly likely that the government would step in and use its golden share to block such a disposal.

Member

In the telecoms market, the result of “competition” is that when one provider increases their retail charges all of the others shortly follow thereafter.

Competition is supposed to result in prices going down! This is not what is seen in practice. The market has failed consumers.

Competition has opened up the system to a new breed of middlemen: price comparison websites. These take a commission and are therefore pushing prices up in what is clearly yet another rigged market.

Member
Mike Mills says:
10 December 2016

Many older people need special landline phones because of being hard of hearing, etc. There is a dearth of suitable, relatively cheap and easy to use mobile phones for such people. So, once again older people are penalised through having little choice!

Member
Carole M Harris says:
10 December 2016

I have avoided phone rental charges for many a year. Using Virgin Broadband only and Vonage ( VOIP )
Voice over the internet protocol. Inland calls via Vonage are free 24/7 and included in the monthly charge. A ” virtual ” number service is available as are business packages.

Member
Frank Lunt says:
10 December 2016

The telecom companies are conning everyone. They are “supposedly” reducing the cost of Broadband services, which people have a choice about buying, whilst at the same time massively raising the cost of our landlines.

They are raising the “Landline” charges which we have to pay for to make it appear that they are reducing the costs of “Broadband”. BT are responsible for this con as every other provider charges the same rates as them.

Yes we do need intevention as these price rises are far above the actual cost of providing the service

Profile photo of duncan lucas
Member

Tell me how other ISP,s are going to provide a cheaper service to 100 % of the broadband population Frank–not just those in urban areas . Who pays ? I honestly would like detailed accounting of how this can be done.

Member
Patrick Millard says:
11 December 2016

I know an elderly lady, 91 years of age, who will never want more than a landline – she is loyal to BT, like many elderly people, but is having to pay its very high rental figure.

Member

BT Home Phone Saver is £21 per month and is designed for exactly this type of person. It is very much cheaper than the standard “line rental and anytime calls” deal.

The price is fixed for three years when you sign up. The price includes line rental and unlimited anytime calls to numbers starting 01, 02 and 03.

Calls to mobile numbers starting 071-075 and 077-079 are 6.5p per minute. Caller ID and Voicemail 1571 is included in the deal. For the foreseeable future the deal also has inclusive calls to premium rate numbers starting 0845 and 0870.

If you can avoid calling numbers starting 070, 0843, 0844, 0871, 0872, 09 and 118, there is nothing further to pay.

Many pensioners are on the “line rental plus weekend calls” deal for around £19 per month. Calls made on weekdays cost 19p per call plus 11p per minute. This is a wholly unsuitable tariff for those who make any calls at all on weekdays. Just fifteen minutes of calls in one month and the cost is already higher than the unlimited calls BT Home Phone Saver deal.

BT does not go out of its way to publicise BT Home Phone Saver, but it is usually the best choice.