BT retail line rental & Ofcom

Customers who only buy landline services from BT are set to get at least £5 a month taken off their bills under plans set out by the telecoms regulator, Ofcom.

And about time too. I hope it goes through. Link.

At the expense of the 20% of the market where competition has people with other line rental providers who are invariably cheaper?

I don't think that's much of a factor Andrew. The majority of those who stand to gain will be with BT and not even aware of the other companies. Most of them wouldn't move away from BT even if they were.

Even I, knowing what I do, having been with BT for phone all my life was very reluctant. It was when I actually opened a bill for line plus evening and weekends and discovered my previously free caller display was being charged despite having been on TPS for decades, with a total of over £24 per month, that I decided enough was enough.

However my total spend in fact went up a bit when I switched the phone away. It released sufficient for me to almost match the total I was already paying but move to a premium broadband provider. Something I previously regarded as too expensive.

I take most of the points you make in your News Article I've just read. I for one may have stayed with BT, but only for phone. However as I have so far a perfectly satisfactory service from my current supplier I strongly doubt if I will move back.

Monopoly power or not, millions of landline-only users are being ripped off to subsidise the Sport side of BT. It needs to be stopped.

Re your point in the article about bundle prices, that's about all I quibble with. At that point it is a reasonably competitive market. If bundle prices rise to maintain existing gross profit margins, in both senses perhaps , that is what should happen. Those paying 50% over-priced landline rental should not be in effect forced to subsidise the entertainment of users streaming BT Sport or Sky Sport.

You noticed that more people will be paying for BT Sport packages after July?

Small operators such as Fuel and Post Office who have carved a voice line rental niche may be less happy, as there is no underlying changing in pricing for them, so to compete they will need to destroy their margin.

A good point re the Post Office. I've heard of Fuel and think I looked it up a while ago.

I would never use either, but that's just me.

Also if PlusNet don't change pricing it will be cheaper to have BT voice line rental and PlusNet broadband even with the £2.50 supplement they charge.

This scenario might not go down well with Sky and TalkTalk either as

For a consumer with zero interest in broadband it is clearly a good deal. The subsidy part applies to many add-ons and taken to its conclusion Ofcom would have to outlaw bundling and added extras

Do you have it confirmed that this does include customers who have landline with BT but use a 3rd party for ISP services over BT lines? I wasn't certain from the BBC article whether it was for customers who literally only had landline service (there was a BT package I think called BT Low User or something similar that you could get lower costs on but if you had a broadband service from any supplier on the line then you couldn't get it).

That could be interesting re Plusnet.

I don't think the following was in the BBC article when I originally read it.

Andrew Ferguson of broadband comparison website Think Broadband said that while the price reduction would be welcome for landline-only customers, "a lot hinges on whether those who buy bundles will just end up subsidising those who buy standalone products".

The whole point is that exactly the opposite is what is happening now. No "whether" about the current situation .

Perhaps ultimately no one should subsidise anyone

BT Basic (the means tested tariff) is not just of the review.

The 117 pages does point out there are some 1.2 million with BT Consumer line rental and broadband with another provider and this change does seem to affect them, whether that survives the consultation to become actual policy is another issue.

If this is NOT the case, then Ofcom needed to make it a LOT clearer and explicit.

In reply to a post by MrSaffron:

Perhaps ultimately no one should subsidise anyone

Precisely .
(In respect of this matter as opposed to life in general).

The best way for that and it would also allow Ofcom to manage prices is for everyone to be removed from the line rental value chain. Leave it to OpenReach to rent lines to customers with a small mark up on their current wholesale prices to cover the billing and management. All that allowing BT Consumer/Retail/Business, Plusnet, Sky, TalkTalk &c to sell line rental does is increase prices to te end users. Take them out of the chain and everyone pays the same base cost. Call packages could still be purchased from your own choice of provider and maybe network services ...

Ultimately yes, and would give a billing relationship for dealing with faults and shorten chain when reporting things.

My money is this change might get an objection not from BT Consumer, but Sky and TalkTalk

Ofcom is hoping other providers will also cut prices

Why hope when they can force the issue, they are strange at times.

Given most providers only care about multi play services I think competition wont reduce it on other providers.

and it should be ignored.

Not sure why everyone is saying its just sky and talktalk who like the line rental situation, as BT retail are guilty as well and usually raise prices first. I dont think BT retail would be happy about losing its line rental margins.

In reply to a post by MrSaffron:

Also if PlusNet don't change pricing it will be cheaper to have BT voice line rental and PlusNet broadband even with the £2.50 supplement they charge.

This scenario might not go down well with Sky and TalkTalk either as

For a consumer with zero interest in broadband it is clearly a good deal. The subsidy part applies to many add-ons and taken to its conclusion Ofcom would have to outlaw bundling and added extras

PN might not be stupid but instead they probably add £1.50 extra on top of £2.50 supplement they charge to make it £4 charge.

What is being said is that competition for line rental does not work. That is a big idea for Ofcom to swallow.

We have competition for gas and electricity prices. The problem is that many do not take advantage of it. So is it what the public really want?

In reply to a post by MrSaffron:

You noticed that more people will be paying for BT Sport packages after July?

Small operators such as Fuel and Post Office who have carved a voice line rental niche may be less happy, as there is no underlying changing in pricing for them, so to compete they will need to destroy their margin.

Are Fuel really going after line rental only customers any more? They want £17.60/month according to their website.

And Plusnet want £17.99 for line rental only without broadband as well. Ofcom should check it out all isp's really not just for BT.

I assume that Ofcom expect that if they force the dominant provider to reduce prices then the rest of the market will have no choice but to follow. But, I wonder how many people use Sky just for landline without a broadband connection? Bet it is a very small percentage of their customers.

Dropped BT Consumer helps 80% of those on a landline only voice contract, i.e. BT Consumer is the bulk

There's probably quite a low percentage of the modern Plusnet broadband customer that is even aware they can have it without Plusnet line rental. The bundled way that Ofcom has made prices be shown now will make it even more hidden.

Then of the ones who are or become aware three more factors come into play:

- many people seem to have a strange obsession with having the bills in one place so will stick with bundled. As BT and the other biggies will keep bundled prices up there is no incentive to switch. In the days of paper bills and having to pay manually in one way or another there was a small justification. In the days of online bills and direct debit it is pointless. We still see relatively young and broadband-savvy people on these forums asking for advice on switching who say they prefer (meaning intend) to keep the bills combined;

- BT Group could at any time make Plusnet change their policy for new customers. In the past it made little difference as Plusnet got an extra £2.50 and the rental was nearly always with BT Consumer anyway, and higher than Plusnet rental;

- I think an amazingly high percentage of the ones not already covered by the above would be hard pushed to work out that having their line with an even cheaper provider with no included calls was still far cheaper than a major provider with a ridiculously highly priced call package.

An exception to the final point possibly being some of those at whom the Ofcom requirement is aimed. BT line only customers who have children oversees and frequent long phone conversations. With no Skype for whatever reason. Broadband with any supplier or no broadband.

Edited by RobertoS (Wed 01-Mar-17 10:04:45)

ofcom are very naive in this respect.