The UK telecoms regulator has finally decided to take a closer look at one of the markets most heated issues, the ever rising price of retail line rental. In recent years this has risen by between 28% and 41% in real terms, while the underlying wholesale cost has fallen by around 25%.
Until very recently one of the most familiar frustrations with line rental (particularly on Openreach’s UK telecoms network) stemmed from the way in which ISPs used it to mask the rising cost of broadband provision (i.e. lots of “free” or “half-price” broadband offers, but the line rental cost would still rise to compensate).
However the recent advertising changes (here), which forced ISPs to combine the cost of line rental and broadband into a single price, may have largely resolved that issue.
As a result of the recent advertising changes, Ofcom’s focus is more on people who buy landline services on their own, which the regulator fears “are not being served well by the market“. Apparently the rising prices are said to be “felt most acutely” by those who don’t also take a fixed line broadband or pay-TV service, such as elderly and vulnerable people.
Breakdown of Landline-only Homes (No Broadband)
* 50% aged under 75 and have a Mobile
* 20% aged 75+ and have a Mobile
* 12% aged under 75 and don’t have a Mobile
* 18% aged 75+ and don’t have a Mobile
The group of people identified by Ofcom above are said to “make up a significant proportion of standalone landline customers” and many may have stayed with the same phone company all their life, becoming quite reliant upon it. Mind you some of them may be able to benefit from a social tariff, such as BT’s Basic Line Rental (£5.10 every month, including £1.50 to spend on calls and free weekend calls to 0845 & 0870 numbers).
Jonathan Oxley, Ofcom’s Competition Group Director, said:
“Our evidence shows that landline providers have been raising the price of line rental, even as their costs have been coming down.
We’re particularly concerned for older and vulnerable customers, who rely on their landline and are less likely to change provider. So we’re reviewing this market to ensure these customers are protected and getting value for money.”
ISPreview.co.uk ran an article on the ‘Changing Cost of UK Phone Line Rental‘ in 2015, which went into a lot of detail on this subject but did so with a focus on its relation to broadband. We also included a quick example (BT) of how retail line rental has changed over the years, albeit focused on broadband providers (note: many non-broadband line rental services follow similar pricing).
BTs Line Rental Price History inc. VAT
2011 = £13.90
2012 = £14.60 (+5.04%)
2013 = £15.45 (+5.82%)
2014 = £15.99 (+3.5%)
2015 (Dec 2014) = £16.99 (+6.25%)
2016 (Sep 2015) = £17.99 (+5.89%)
2016/17 (Apr 2016) = £18.99 (+5.56%)
Much of what we discussed in the above article is still relevant, such as the impact of falling call revenues (providers may have to compensate for this), reductions in care (repair) level by some ISPs (saves ISPs a small bit of money) and annual inflation on service prices (recently this has been close to 0%, but in the past it was much higher). We also predicted a future where traditional voice calling will be replaced by VoIP solutions and your “line” will only be used for the data side (broadband).
The recent changes to broadband advertising have arguably turned the market on its head and it will be interesting to see how this impacts the price of standalone line rental going forward, particularly as providers can no longer use it to mask the rising cost of broadband.
However we should point out that there are still providers offering cheap line rental (e.g. AAISP, Aquiss etc.) and you can see a List of Line Rental Prices on our site, although this only reflects the services offered by ISPs. Remember that the cost of calling will vary between providers and some, such as AAISP, sell it more as a line-only solution (no voice calls) to support broadband.
Ofcom’s new Narrowband Market Review 2017 is expected to publish its conclusions in September 2017 and any changes to the market would then be introduced to run from 1st October 2017 to 30th September 2020. This consultation specifically relates to the wholesale prices that BT (Wholesale / Openreach) can charge other telecoms providers to offer homes and businesses a telephone service over its copper network.
UPDATE 1st Dec 2016