UPD2 BT Raise Broadband and Phone Prices – Holiday to Bury Bad News

The consumer division of BT has used the bank holiday weekend, when many people will be taking time out away from home, to confirm that millions of their broadband and phone customers across the United Kingdom will again suffer the now traditional price rise from December 2014.

As usual BT sets the benchmark for annual price rises, with all of the other major ISPs tending to following suit at a later date. Unsurprisingly this year is no different and the level of increase also appears to be broadly in line with previous years, which is par for the course when needing to be mindful of shareholders and dividend payments. On the other hand it makes some services, such as unavoidable phone line rental, seem increasingly unattractive.

So what’s new this time around? Firstly BT’s standard Phone Line Rental charge will rise by 6.25% from £15.99 per month to reach £16.99. The cost of calls will also rise by around 6.44% and broadband prices will go up by a similar amount, although prices for existing bundles should be honoured.

John Petter, CEO of BT Consumer, said:

“BT is sensitive to the tough economic times and we’ve taken care to make sure that low-income customers avoid price increases. We’ve added extra money-saving options for low-income customers and for customers who only want a phone line for calls.

Although some prices have gone up, we want to help our customers to find the best value BT option with Right Plan. We are introducing extra ways for customers to maximise their savings, such as the UK’s cheapest line and broadband bundle for low-income customers and Home Phone Saver for customers who just want a great value standalone telephone package.”

In addition, BT recently confirmed (here) that the cost of their BTSport TV service for non-BT broadband customers would rise from £12 to £13.50 per month from 1st October 2014.

History of BT Phone Line Rental Rises
2011 = £13.90
2012 = £14.60
2013 = £15.45
2014 = £15.99
2015 (Dec 2014) = £16.99

Meanwhile the underlying wholesale cost of line rental has remained fairly flat for several years, with many related services costing around £8 to £10 +vat per month (remember ISPs also need to add the cost of their calling services, a profit margin and VAT on top). Never the less that gap between wholesale and retail has significantly widened, with many suggesting that hiking line rental is the alternative way of covering discounts in other areas (e.g. broadband).

UPDATE 25th August 2014

Just added a short paragraph at the bottom to put the wholesale and additional ISP costs into a bit of perspective versus retail pricing.

In addition, BT informed ISPreview.co.uk on Saturday that they would also be introducing some new products “which will allow customers to save money” (see direct from the horses mouth below):

Home Phone Saver:

We have listened to feedback from customers, particularly elderly ones who don’t want to take a deal that includes broadband and so are launching Home Phone Saver, a great value standalone telephone package. It costs just £19.99 a month, which is a saving of £11.95 a month, and the price is fixed until January 2017 with a 12 month contract. It offers a line, Anytime calls, free Caller Display, Anonymous Call Reject and Choose to Refuse in order to help manage nuisance calls and no extra charge for paying by cash or cheque. We will be contacting all the relevant customers to draw their attention to it.

BT Basic + Broadband:

The cost of BT Basic (our phone service for low-income [customers on state benefits]) is not changing and remains at £5.10 a month with a call allowance. We are launching a new broadband offer for these customers meaning low-income customers who also want broadband can get a market-leading deal from BT without losing their cut price line rental. BT Basic + Broadband will cost £9.95 a month and is the UK’s cheapest line and broadband bundle ensuring that customers on qualifying benefits get the best prices.

UPDATE 2nd September 2014

Completely forgot to mention how BT later confirmed that their pre-paid Line Rental Saver option would also increase from £159.84 to £169.90 on 01/12/2014 (i.e. equivalent to £14.15 per month). Also the set-up-fee for landline calls will increase from 15p to 15.97p and the call price per minute for landline calls will increase from 9p to 9.58p.