Landline phone prices review launched by Ofcom

Telecoms regulator Ofcom has launched a review of landline rental prices after concerns that people may not be getting value for money.

It said landline prices have risen by up to 41% in real terms since 2010, while wholesale prices have fallen by a quarter

http://www.bbc.co.uk/news/business-38166781

Old news to TBB members, though many that stick with the big suppliers just don't bother to check these facts.

Oddly and plan to highlight release says "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." while it appears the detail acknowledges the wholesale has been flat or going down

Safe to say people like Pulse8 have no fear of being included.

They have got it right there.

It's the remorseless climb in retail prices charged by the larger players that needs to be looked at rather than the slowly falling wholesale price. OFCOM really do seem to be screwed up nowadays. Sky & TT must be rubbing their hands to see BT yet again in the firing line whilst they together with BT Consumer, BT Business, Plusnet, etc. continue to rip off their landline customers.

I don't really see the logic here. Providers have been asked to display an all inclusive price on their websites, but now Ofcom wants to look at the price providers are charging for line rental which isn't even itemised any more?

Edit: Oh I see it's a "landline-only" review, can't be many of those customers left.

Edited by Oliver341 (Thu 01-Dec-16 15:13:07)

The phone line only market is so small I cannot recall I saw an advert for it in press or on TV.

Virgin Media have promised a price freeze, but my guess is Ofcom might be looking at something more akin to the BT Basic pricing that is below cost for a small portion of the public.

In reply to a post by Oliver341:

Edit: Oh I see it's a "landline-only" review, can't be many of those customers left.

Surely everyone that has a landline pays this charge. How/why single out those that don't have broadband on it?

In reply to a post by hk11:

Surely everyone that has a landline pays this charge. How/why single out those that don't have broadband on it?

We all know the price of broadband is low because the price of line rental is high, but only the total cost of the two combined matters when we come to compare providers.

But if you have a phone line without broadband it's quite obvious that line rental is inflated to subsidise broadband, hence the review.

In reply to a post by Oliver341:

if you have a phone line without broadband it's quite obvious that line rental is inflated to subsidise broadband, hence the review.

So we can expect broadband to go up, cause sure as eggs are eggs nothing ever goes down!

In reply to a post by hk11:

So we can expect broadband to go up, cause sure as eggs are eggs nothing ever goes down!

The review is only for landline-only customers. If landline-only customers are shown to be subsidising phone+broadband customers then yes, we might see providers forced to reduce their landline-only prices, which is fair. But if that happens, given how the vast majority of customers are phone+broadband, I expect the cost impact on providers would be minimal and they may very well not need to pass on their loss of revenue to their landline+broadband customers.

In reply to a post by Oliver341:

they may very well not need to pass on their loss of revenue to their landline+broadband customers.

Well they haven't passed on the reductions they have seen in wholesale costs to customers so far have they?

In reply to a post by MrSaffron:

Oddly and plan to highlight release says "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." while it appears the detail acknowledges the wholesale has been flat or going down

I have this recollection from earlier this year that Ofcom can only actually regulate one company, though I suspect that means one company with SMP in each market.

If that's true, then they have no choice but to start from reviewing the current wholesale line rental market. I suspect the conclusion will be that regulation of the wholesale product is not having the desired effect, and that they need to regulate the retail market as well...

I don't have time to go check though...

The trend seems to be towards having phone and broadband combined deals from the same supplier. It is not clear whether this study covers those who have phone and broadband from separate companies (such as I do) who are suffering the high line rental cost. I imagine this section of the community is far from 'small' and is probably a significant percentage of the total lines in the country.

Imagine - given the bundling activity of BT/PlusNet/EE/Sky/Virgin/TalkTalk all depends on what you call significant, but pretty much expect 85-90% of people with broadband and phone to have them from the same supplier.

Not just you, but yes regulation of BT and KCom is the key, if they determine another provider to be dominate in a sector then they can take on regulation.

One potential option is WLR prices to get a lot lower to the point where retail will reduce, but broadband elements to increase in cost so for those with a bundle it is cost neutral. What you do with MPF is difficult, as lower WLR will ensure they want lower MPF so the LLU bundles would be cheaper.

It seems Ofcom, or at least the person writing the press release, doesn't understand the difference between Openreach WLR3 pricing and what CPs are charged for it.

Or have I got it wrong, not them? I thought that CPs bought lines from Openreach, not from BT Wholesale. If some buy from BT Wholesale alongside WBMC, then why?

about 4 years it took them to notice this? and I told them 3 times, and got told silly replies like they believe nothing to be wrong.

So considering the replies I got, what did actually trigger them to do this?

In reply to a post by dsergeant:

It is not clear whether this study covers those who have phone and broadband from separate companies (such as I do) who are suffering the high line rental cost. I imagine this section of the community is far from 'small' and is probably a significant percentage of the total lines in the country.

Look at Pulse8Broadband line rental. (That link opens on the Business tab so click the Home one).

Many of us on these forums have that along with some other supplier for broadband. I have had BT rental all my life but switched to P8 in August 2015. My ISP at the time was a Plusnet and I'm now with AAISP. The phone costs me £13pm plus £1pm caller display.

I hardly use the landline phone, but when I do the cost is neglible. If you think of a typical Anytime calls package at say £7pm, that's 700 peak time minutes with per second billing, and more at off-peak. International calls also cheap. Even E & W call packages from the big boys are a rip-off. And just look at big boy call setup charges outside a call package! BT is 11p now I think. Zero on Pulse8.

Aquiss and perhaps vivaciti also have low cost phone that allow other ISPs. Uno require you to have broadband with them for their low cost line rental.

What matters, is the elderly and less well of, some with no interest in broadband and barely able to meet the cost of a phone line and calls, are subsidising loss-leading click-bait broadband prices. Some I know, think there is only BT!

Edited by professor973 (Fri 02-Dec-16 11:18:36)

In reply to a post by dsergeant:

It is not clear whether this study covers those who have phone and broadband from separate companies (such as I do) who are suffering the high line rental cost.

I think it would cover you too, basically anyone who takes a landline from a provider without also taking broadband from the same company. Split landline pricing depending on whether the customer has broadband or not with another company would be pretty hard to administer.

They split the broadband pricing easily enough.

In reply to a post by RobertoS:

They split the broadband pricing easily enough.

Yes but how would they know whether you are taking broadband with another company or just have a landline without broadband?

In reply to a post by RobertoS:

BT is 11p now I think.

15.97p since November 1st

In reply to a post by Oliver341:

In reply to a post by dsergeant:

It is not clear whether this study covers those who have phone and broadband from separate companies (such as I do) who are suffering the high line rental cost.

I think it would cover you too, basically anyone who takes a landline from a provider without also taking broadband from the same company. Split landline pricing depending on whether the customer has broadband or not with another company would be pretty hard to administer.

For some reason, it appears to be common now to bundle a landline contract and broadband together. Why this is necessary, I just don't know. There is no connection between them, they are separate services, albeit in the case of FTTC they delivered over the same physical line. It's even more nonsensical that landline and FTTP are bundled together, but it seems that BT do not allow you to order FTTP without also getting your landline contract from them too.

It used to be the case that you could indeed get broadband and landline from separate companies, but the providers have made us accept that the things actually go together and you can't go to another company for one or more of them. The recent rulings on including line rental with broadband costs have exacerbated the problem and demonstrated that they didn't understand the market or the problem. Standalone line rental, where still available, now sticks out like a sore thumb. That's the problem that should have been sorted in the first place, not forcing it to be included with broadband.

I have long-stated that bundling is anti-competitive. They're not stupid you know. They're out to make money and stop customers from going elsewhere. There is no other reason for what's happening. That's also the reason for making it more acceptable to buy a calls package at additoonal cost to line rental, by making calls outside a package prohibitively expensive. They gradually get you to increase the amount you're paying.

There is also another group of people to consider with standalone line rental - those who have no mobile reception at the house.

Edited by deleted (Fri 02-Dec-16 13:35:08)

Post deleted by csimon

Reason is because of the rise in popularity of fully unbundled services, the result of the LLU changes that the Ofcom creation of Openreach produced.

LLU was used prior to this, but SMPF was more popular, TalkTalk with its bundle offering in 2006 tipped the market towards bundling

So the suggestion is that WLR is reduced to less than the cost of MPF and then the difference is made up by the SMPF cost being increased? That would mean OR receiving less money for the copper network as there are still a considerable number of voice-only lines. Even a modest £2 a month off WLR would surely amount to £150m a year or so (not just domestic, there are lots of business lines not enabled for BB). That's assuming there are only just over 6m voice-only WLR lines. That's quite a hit to OR's cashflow.

Also, what it amounts to is dumping the entire cost of subsidising voice only lines onto BT in addition to their existing social rate commitments (also loss making), albeit a different part of the business.

I really don't see it happening. They do have to look at the operation of the retail market. I'm not sure what, but if Ofcom want to see a social subsidy for voice lines, then they ought to make it explicit and cross-industry as some companies are having a free ride on this matter.

It's simple enough to me. It will be addressing the cost of line rental. Bundled or not in an inclusive headline price, the line rental element is the same and should cover both.That though may be full circle with th eline rental element of bundles needing to be made clear.

Edited by professor973 (Fri 02-Dec-16 14:05:34)

In reply to a post by TheEulerID:

So the suggestion is that WLR is reduced to less than the cost of MPF and then the difference is made up by the SMPF cost being increased?

I don't think the wholesale price is the issue. WLR3 is £7.23 at wholesale, and yet BT are changing landline-only customers £15.83 at retail (both excl vat), a 119% mark-up. As far as I was aware, Ofcom are looking at retail pricing, not wholesale.

Edited by Oliver341 (Fri 02-Dec-16 14:13:12)

Click on BT call charges:-

https://www.productsandservices.bt.com/products/phon...

In reply to a post by RobertoS:

BT is 11p now I think.

I stand corrected. It's 19p (wow)

its daylight robbery, BT somehow are uncompetitive vs mobile call packages but of course a landline can only be used in one location whilst a mobile can be used anywhere in the UK.

What on earth is the connection fee for other than profit making?

the elderly and less well off ... barely able to meet the cost of a phone line and calls, are subsidising loss-leading click-bait broadband prices. Some I know, think there is only BT!

I agree with this. The one thing I would say for BT is that they have a priority repair scheme for the vulnerable people you mention, and our community group found it worked very well on the two occasions we have required it.

But given their current ruleset they cannot impose a remedy on the retail pricing of Sky and TalkTalk.

Imagine the outcry if BT Consumer was forced to reduce the price of its retail line rental product across the board for all those that don't have a broadband service.

You are of course correct, you can have our low cost line rental at £11.40 per month and have a different ISP supplying your broadband.

In reply to a post by Bob_s2:

Telecoms regulator Ofcom has launched a review of landline rental prices after concerns that people may not be getting value for money.

It said landline prices have risen by up to 41% in real terms since 2010, while wholesale prices have fallen by a quarter

http://www.bbc.co.uk/news/business-38166781

Well the hundreds of milions of pounds that BT is paying for football coverage has to be paid for by someone - and line rental is the easiest way for BT to cover those costs.

Vodafone have complained to Ofcom about the way Sky and BT have been able to dominate the broadband market through the use of exclusive sport content. Aparently the Spanish broadband market is dominated in a similar manner.

Mabe Ofcom should ensure that such content is made available to all broadband customers at the same price.

's funny. I'm pretty sure that BT requested Ofcom looked at the pay TV market alongside broadband too, because of Sky's dominance. Fat lot of good that did, so I expect Vodafone will get the same outcome.

In reply to a post by michaelh:

Well the hundreds of milions of pounds that BT is paying for football coverage has to be paid for by someone - and line rental is the easiest way for BT to cover those costs.

Its an easy myth to perpetuate, isn't it?

I guess we could knock it on the head if, say, VM and Sky and TalkTalk, for example, all increased their landline charges at a faster rate than BT, right?

Oh... wait a minute...

All of them did increase their line rental more than BT between 2010 and 2016 - between 10% and 15% more. The Ofcom review that this post is all about has all the numbers.

Remind me. When did BT start paying for football rights? It was 2013, wasn't it?