Cost of using BT (possibly other providers) could rise!

bbb_uk

Ofcom have a consultation out titled Retail Price Control.

This consultation proposes to remove the regulatory controls Ofcom has over BT. Right now all (or most) price changes BT does needs Ofcom approval but Ofcom want to remove most regulatory controls which basically would allow BT greater freedom in increasing/decreasing prices as they see fit. Ofcom claim that due to competition, BT are likely to reduce their prices to remain competitive.

At first this sounds great but the evidence from BT so far suggests that prices keep going up instead of coming down! For example, below is a list* of things that have increased (some of which weren't that long ago):-

1. Line rental on BT Together Option 1 from £10.50 to £11.00 per month
2. Extension of daytime rate to start at 6am instead of 8am
3. Minimum call charge from 5p to 5.5p (6p for business)
4. Evening/weekend rate after 1 hour from 1p to 3p per minute
5. Call charge to Speaking Clock 123 from 20p to 30p
6. Minimum call charge on public payphones from 20p to 30p
7. Introduction of £5 late payment charge
8. Call charge to directory enquiries 118500 from 15p to 23p per minute plus 40p connection charge
9. Ring back charge from 10p to 15p per use - chargeable even if not connected after 45 minutes trying
10. Introduction of call return fee of 6p for pressing 3 after 1471
11. Introduction of call return fee of 7.5p for pressing 0 after 1571
12. New installation connection fee increased from £75 to £100 then to £125

Ofcom in its consultation has listed 4 possible options with regards to this consultation and they are:-

• Option 1 – no control for line rental and calls for residential customers
  Comments: This option isn't ideal because it would mean BT would have full control without any Ofcom intervention.
• Option 2 – continue with the existing controls
  Comments: This option would mean that things remain as they are and BT would still be required to get Ofcom approval before price changes.
• Option 3 – a control only on BT’s basic price for line rental
  Comments: This option would give BT control over setting its own call charges but linerental would still be under the watch of Ofcom. This proposal would ensure that those consumers seeking the lowest option of line and call charges are still able to do so without risk of BT increasing prices as they have done recently with regards to their linerental, minimum call charge, etc.
• Option 4 – no controls from August 2006 but an agreement by BT to protect low spenders
  Comments: This is Ofcom's preferred option which it believes is best for consumers even though they do not go into any relevant detail about what assurances BT has made (considered to be confidential). It can be said that even with current competition, in general, prices for linerental and some other prices have and still are increasing. An example of this is that when BT increased their linerental to £11, instead of their main competitors (Telewest, NTL & TalkTalk, etc) taking advantage of this, they instead increased their linerental in line with BT's - thus confirming despite competition is possible it doesn't mean that it will actually happen and therefore without some kind of safeguards provided by regulation, us consumers may see more price rises. Ofcom, do however, confirm that those on BT's Light User Scheme or In-Contact Plus tariffs will remain and be regulated but those on other tariffs will not be but instead have some assurances from BT for which they can't go into detail.

More details about this consultation can be found on Ofcom's website here or is also being discussed on Sayno here.

Unfortunately, this consultation closes this coming Tuesday 30th May at 5pm


* The list of increases mentioned above were posted by forum member AP here. Thanks!

hammy_the_hammer

to be fair every 'bt' customer in the uk has the option not to pay most of the charges that you have put in your increases list....as this forum is testament to

Hunnymonster

Yes but all BT customers have no option but to have the flannel associated with Option 1. I for one don't want it, nor do I wish to pay for it.... but if I want a phone from BT I have to pay it.

Bring back Line Rental Only.

bbb_uk

hammy_the_hammer wrote:

to be fair every 'bt' customer in the uk has the option not to pay most of the charges that you have put in your increases list....as this forum is testament to

That is true to a certain degree. When BT increase their prices in someway then the rest just follow suite this means that we cant use the 'threatening to leave' thing because someone else is doing it cheaper as it wont be true. This is the case for linerental now.

The point being is that Ofcom are of the thinking that competitive pressure would stop BT from increasing their prices but there has been no evidence to prove this that I can see - it's the other way around in that when BT increase their prices most others follow suite. I think Ofcom need teaching with regards to what counts as being competitive! :rotfl:

Besides, only those that use this site know about haggling for cheaper prices. I'm afraid not everyone knows about this site so Ofcom still maintaining some control over BT's prices would help us all - not just MSE forum members but those that are not even aware of this site and its many, many moneysaving ideas. :money:

hammy_the_hammer

although this is a great site people are far more likely to have found out about other telecom carriers via advertising and newspaper/magazine articles.
also my phone bill used to be about £120 a quarter 10 years ago ...it is now something like £40 a quarter....all as a result of the telecoms market becoming competitive. i actually find it ironic that when people are promoting on here the benefits of keeping bt line rental and using other companies for the calls that there's no thought about how bt are going to be able to supply a line without recouping the money via the line rental.

ahrimaniac

'Bring back Line Rental Only.'

'i actually find it ironic that when people are promoting on here the benefits of keeping bt line rental and using other companies for the calls that there's no thought about how bt are going to be able to supply a line without recouping the money via the line rental.'

You're spot on. This board is fantastic, but I do feel people can be a little blind sometimes. BT are a massive company, yes, but they still allow you to have just the line with them and make every single call through another provider without penalty or cost. The £11 pays for the line rental - if you didn't pay that to BT, you'd only pay it to another provider. Someone does need to fix and maintain the lines in order for you to have telephone service, and 9/10 it's BT.

Gets really annoying when people bang on about how BT are ripping them off simply because they have to pay £11 a month in order to use a telephone line which usually costs them nothing to repair as BT sort it out. Add to that the amount of BT money being spent on making sure people can get broadband, regardless of which company they go with, and high quality calls to boot...bah.

bbb_uk

ahrimaniac wrote:

BT are a massive company, yes, but they still allow you to have just the line with them and make every single call through another provider without penalty or cost. The £11 pays for the line rental - if you didn't pay that to BT, you'd only pay it to another provider. Someone does need to fix and maintain the lines in order for you to have telephone service, and 9/10 it's BT.

They don't do it because they want to. They do it because they are told to otherwise there would only be two companies we could choose from and that is BT and NTL/Telewest. All other companies offer their services via a method knowing as CPS (carrier pre-selection) and this was because the EU said the UK had no effective competition in the telecoms area so the EU forced Oftel (now known as Ofcom) to do something to increase competition.

An Ofcom consultation revealed that the lines we rent have been paid after all these years and that the cost of maintaining them is not as high as the £11 BT charge us.

Add to that the amount of BT money being spent on making sure people can get broadband, regardless of which company they go with, and high quality calls to boot...bah.

I'm afraid you'll find that regardless of which company you choose for BB this other company still pays BT per month (or whatever it is) for your use of broadband. BT don't lose out, they charge other broadband suppliers for accessing, fitting, and using BT's own system.

The difference is BT have what is known as SMP (Significant Market Power) and can at anytime (if they were allowed) increase their prices and this ultimately effects us all regardless of which other company we use as they still have to pay BT but if these other companies have to pay BT more then this is passed on to us consumers.

It works little different from the cable company NTL/Telewest as its their own system, etc they use but NTL/Telewest is only available in a very small population of the UK compared to BT. All other broadband and call providers, pay BT for their use, connection, installation, etc of BT's lines, exchanges.

The only real competition that is just emerging is those using Local Loop Unbundling (LLU). This means that they have their own equipment in BT's exchanges to avoid paying BT at their prices. This ultimately is cheaper for these companies but as I said earlier, it is just emerging because companies like TalkTalk, BullDog are to name a few use the LLU method and again LLU is only available in a smaller population areas compared to BT.

Ultimately, it appears that BT never lose out

gt94sss2

bbb_uk wrote:

Ofcom have a consultation out titled Retail Price Control.

This consultation proposes to remove the regulatory controls Ofcom has over BT. Right now all (or most) price changes BT does needs Ofcom approval but Ofcom want to remove most regulatory controls which basically would allow BT greater freedom in increasing/decreasing prices as they see fit. Ofcom claim that due to competition, BT are likely to reduce their prices to remain competitive.

At first this sounds great but the evidence from BT so far suggests that prices keep going up instead of coming down!

What people seem to forget is that many of the BT price increases are caused either directly or indirectly by their current regulatory rules

For instance:

- Moving customers from BT Standard to BT Option 1.
- Line rental on BT Together Option 1 from £10.50 to £11.00 per month

Oftel/Ofcom would have forced BT to do these, if they had not done them.

Others are where BT are simply beginning to charge where other companies have for a long time such as the introduction of a late payment charge.

Others are for "new services" such as 1471/1571 and/or new functionallity which BT have introduced and where BT cannot make a loss or it would be deemed anti-competitive to their competition.

The worst one is probvably the DQ system - who really wanted 192 to change apart from a few of BT's competitors...

Regards
Sunil

bbb_uk

gt94sss2 wrote:

What people seem to forget is that many of the BT price increases are caused either directly or indirectly by their current regulatory rules

For instance:

- Moving customers from BT Standard to BT Option 1.
- Line rental on BT Together Option 1 from £10.50 to £11.00 per month

Oftel/Ofcom would have forced BT to do these, if they had not done them.

As you say BT had done this on their own back and in fact Ofcom were surprised that they did it (especially with regards to moving people from BT Standard to BT Option 1). With regards to linerental increase, Ofcom allowed BT to increase and didn't force it - it would appear that this was BT's choice.

Others are where BT are simply beginning to charge where other companies have for a long time such as the introduction of a late payment charge.

You see that's the pattern these teleco's have in common. When BT increase their prices, the rest follow suite. If another teleco charges for something that BT didn't (very unlikely these days) then BT follow suite. BUT if you look at the consultation, Ofcom state that competition alone would ensure BT wouldnt do this but no evidence exists (that I can see) to prove that BT are being competitive.

This list in my OP has all the things BT have increased even before they may lose their regulatory controls so exactly what evidence (if any) does Ofcom have that they (BT) wont just increase things if they had nearly full control of their prices? None that I can see. As mentioned before, other competitors just tend to follow suite with BT on their price increases so from what I can see competition-alone will not keep prices down.

If BT want to be competitive then why do they keep increasing prices?

My main concern is that Ofcom have some sort of assurances (nothing concreate or legal though so BT could change their minds without penalty) but Ofcom have agreed with BT to keep these assurances confidential and yet despite not going into detail about what assurances have been agreed, Ofcom still recommend an option that basically gives BT nearly full control of their prices without informing us consumers what assurances have/haven't been given.

Poppycat

I was angry when BT shoved the line rental up last year, we pay our line rental for what? I dont see any justication for a rise, just greedy BT.

Most of friends and family and not with any other company that BT that I know we may have competition but from my own experince no one i no switches, even though I have done for years.

I use onetel talk talk and 18666 of whetever it is, well its late.

gt94sss2

bbb_uk wrote:

As you say BT had done this on their own back and in fact Ofcom were surprised that they did it (especially with regards to moving people from BT Standard to BT Option 1). With regards to linerental increase, Ofcom allowed BT to increase and didn't force it - it would appear that this was BT's choice.

Trust me, Oftel/Ofcom were not suprised when BT make changes to its line rental. BT spend ages discussing these sorts of changes with them before they get formally notify them.

This list in my OP has all the things BT have increased even before they may lose their regulatory controls so exactly what evidence (if any) does Ofcom have that they (BT) wont just increase things if they had nearly full control of their prices? None that I can see.

The other thing to note is that some of the price changes in that list are not subject to the existing price controls anyway...

My main concern is that Ofcom have some sort of assurances (nothing concreate or legal though so BT could change their minds without penalty) but Ofcom have agreed with BT to keep these assurances confidential and yet despite not going into detail about what assurances have been agreed, Ofcom still recommend an option that basically gives BT nearly full control of their prices without informing us consumers what assurances have/haven't been given.

If BT made its promises public, it competitors would know what they were.. which I imagine is the problem.

Also, its important to notice that this consultation would only affect the retail prices that BT charges - not its wholesale prices which continue to be regulated regardless and if BT raise its retail prices "to much", someone will just come in and undercut them. (much like some companies (CPS, WLR, LLU etc) are doing now but the incentive to switch would be much greater.

Note: I am not saying that retail price controls should not continue - in fact, oddly, I believe that in may cases the fact that BT has been forced to cut prices in the past has actually benefitted it and there are other regulatory changes I would like to see as well such as making all telco's fund the USO etc - justthat your original post seemed a bit OTT to me

Regards
Sunil