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Court Hearing Begins in BT UK Landline Overcharging Case

Thursday, June 24th, 2021 (12:23 pm) - Score 2,616
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Broadband ISP BT has today said it will “vigorously defend itself” – at the Competition Appeals Tribunal (CAT) – against the claim of having allegedly overcharged c.2.3 million landline-only customers, which has been brought by law firm Mishcon de Reya on behalf of a former Ofcom telecoms consultant, Justin Le Patourel.

The case is focused on the fallout from Ofcom’s 2016/17 review of the associated market (here and here), which found that landline-only customers (i.e. those who didn’t take a cheaper broadband bundle) had been “getting poor value for money compared to those who buy bundles of landline, broadband and/or pay-TV services.”

At the time, Ofcom noted that customer bills for line rental had risen significantly since 2009, while at the same time BT’s costs (wholesale) for providing it had fallen over the same period. One catch here is that this largely reflected monthly line rental, but not so much the fall in calling volumes that hit related revenues (a key weighting factor for operators when setting retail prices).

Naturally, Ofcom put some pressure on BT to respond, and the operator did so in 2018 by voluntarily cutting the line rental charge for c.900,000 vulnerable landline-only customers (reduction of £7 per month), while at the same time capping any subsequent overall increases to line rental and call charges to inflation (here) – this was recently extended (here).

The CAT Hearing

The new case is thus based around the somewhat retrospective allegation that BT were overcharging around 2.3 million landline-only customers between 2015 and 2018 (a limitation in the collective litigation rules prevent this being dated all the way back to 2009). If successful, the case could force BT to pay out over £500m in compensation to consumers (or around £200 to £500 each).

NOTE: The case will also seek compensation for customers who took both a broadband service and a BT landline, but not together as a package (or ‘bundle’).

We first reported on all of this in January (here), and today sees the start of the CAT’s official hearing (expected to last several days), which will decide whether the case should proceed to a full trial. Another key question is whether Mishcon de Reya will be granted authorisation by the Tribunal to act for all the BT customers who were allegedly overcharged (i.e. relevant customers could be automatically represented).

A BT Spokesperson said:

“We strongly disagree with the claim being brought against us.

We take our responsibilities to customers very seriously and will defend ourselves against any claim that suggests otherwise.

We take pride in our work on the Customer Fairness agenda. For many years we’ve offered a discounted social tariff in what is a competitive market with competing options available, and this month we are extending that to help a potential four million households on low incomes, save on bills and stay connected to vital online services.

We assure our customers that we will not let this claim disrupt the relationship BT has with them. We will continue to support our customers through the pandemic and beyond.”

Consumers will no doubt see the case as having some merit, but it’s worth remembering that Ofcom’s original statement made no official finding of excessive pricing or breach of competition law more generally. Admittedly, it’s unclear whether that would have changed had BT not made such a commitment, but the fact is they did and so any prospect of a legal clash was avoided.

BT then made the change to its pricing voluntarily, which was accepted by Ofcom, and we shouldn’t forget that broadband ISPs and phone providers have the freedom to set retail pricing however they so choose – albeit often restricted by the realities of competition.

The case isn’t just of interest to BT, since many other broadband ISPs and phone providers were happily charging (or overcharging) similarly high prices for retail line rental during that same period, even though they didn’t have to do so. Suffice to say that there will be quite a few industry eyes casting a glance toward this case over the next few days.

Another risk, should the case succeed, is that it might discourage operators from making similarly pro-consumer voluntary commitments on pricing in the future, for fear of leaving themselves exposed to such claims. The likely outcome of that would be a rise in the number of legal cases that Ofcom have to fight in order to reach their desired outcome.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
3 Responses
  1. Adam Jarvis says:

    Part of BT’s argument is that landline only/split customers that failed to switch, had an option to switch to the cheaper BT tariff “BT Home Saver plan tariff and failed to do so.

    Such a switch potentially saving around £11 a year, but what wasn’t pointed out when making this comparison is there are specfic additional contract conditions (fair usage plan, i.e. maxumum of 1000 inclusive mins/150 calls a month) placed on such tariffs that tie the customer to BT further, importantly, to take this marginally cheaper tariff requires a BT customer signing up to a 12 month contract, moving from a simpler month by month, line rental contract.

    This comparison is therefore not a valid one by BT, as lack of engagement, as they are not comparable products, it ignores the flexible element of a one month line rental contract.

  2. Scott Laird says:

    BT are not applying fair conditions and terms all over the UK.
    Example I have a landline and broadband I upgraded my mobile to S20 5g I pay over £100 a month for ADSL 10Mbps max upload a landline I seldom if ever use a 5g Mobile no 5g in this area.
    I checked a similar postcode in Peterborough they get 80Mbps for same price as me. I contacted Openreach to see if I can get faster broadband they stated 80 Mpbs is available to me but I need my provider to OK it. So online to BT put in my postcode to see if I can get upgraded they informed me I got 10Mbps the max stated. But if I pay another £10 I can get Halo 3 and super fast broadband when it’s available plus a booster in every room and EE WiFi.
    Not a happy customer

    1. Adam Jarvis says:

      It sounds like your FTTC cabinet is ‘at capacity’ and not accepting any new FTTC connections. In these situations the only service offered/availabe is ADSL, but BT obfuscate this information from the potential customer, nowhere does it explicity say this is due to a cabinet capacity issue but you can check through BTWholesale.

      You can check whether a cabinet is ‘at capacity’ using the BTWholesale availabiity checker website:
      https://www.broadbandchecker.btwholesale.com

      Use the address checker (click Address first):
      then check “WBC FTTC Availability Date”, it should say “Available” or “Waiting List”.

      If it says “Waiting List”, this is a competition issue, aka. Openreach are failing in their remit to offer the ability to switch provider for existing customers or take new customers (as in your case), best approach is to take it up with your MP.

      It’s annoying too because it’s not an area covered by any of Ofcom’s compensation schemes. Ofcom need to address this discrepancy pronto.

      Openreach have a special high level liason team that deal with issues raised by MPs, it will get fast tracked.

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