Court Trial to Start Over BT’s Alleged UK Landline Overcharging UPDATE

After a three-year battle, the Collective Action on Land Lines (CALL) campaign will this month finally take national broadband ISP and phone provider BT to trial as part of a £600m £1.3bn class-action lawsuit, which alleges that the UK telecoms giant overcharged 2.3 million of its landline-only phone customers between 2015 and 2018.

The original claim was first raised at the start of 2021 through UK law firm Mishcon de Reya, which is acting on behalf of a former Ofcom telecoms consultant – Justin Le Patourel. At issue is Ofcom’s 2016/17 review of the narrowband 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.”

The review also found that customer bills for line rental had risen significantly since 2009, while at the same time BT’s costs (wholesale) for providing the service had fallen. But this does ignore the fall in calling volumes that hit related revenues (other link costs may have also been excluded) – a key weighting factor for operators when setting retail prices.

Nevertheless, Ofcom put 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 again extended in 2020 for another 5 years (here). CALL’s campaign uses much of this as the basis for their wider overcharging claim.

CALL’s Case Goes to Trial

The latest development is that, after a series of battles in the appeals court, which BT lost (here), the case will finally go to a full trial on Monday 29th January 2024 and the court expects to finish hearing all evidence by 1st March 2024. In theory, a victory for Justin Le Patourel could force BT to pay out up to £600m £1.3bn in compensation to consumers, although such headline figures are often optimistic.

The campaign has also been approved to represent all affected BT customers, unless they decide to opt out. This means that if you purchased a BT landline without broadband any time between October 2015 and April 2018 (October 2015 – today, for certain business customers), or you purchased a BT landline with broadband (from BT or another company) – but not under the same contract – any time after October 2015 to today, you will automatically become a class member in the claim.

The rules prevent CALL’s case being backdated even further.

A BT Group spokesperson told ISPreview:

“We take our responsibilities to our customers very seriously and are dedicated to keeping our customers connected, while helping those who need it most.

This claim relates to a technical landline pricing issue which was resolved by Ofcom in 2017. We do not accept that our pricing was anti-competitive back then, and as such are committed to robustly defending our position at trial.”

Justin Le Patourel (CALL) said:

“We are looking forward to the trial, which starts on 29th January, and lasts for eight weeks. The Lawyer magazine has listed this as one of its top 20 cases of 2024. It’s the first to go to trial under the new competition class action regime.

We will be arguing that BT abused its dominant position in the landline market, and mistreated its loyal customers by overcharging them by hundreds of pounds each. We will be fighting for each and every one of them.”

Under the Competition Act, CALL’s team will probably need to prove that there is a market for Standalone Fixed Voice (SFV) services (Ofcom seemed to say there is), that BT was dominant in this market (it has a sizeable share), and that it abused this dominance – breaching a legal obligation (abuse of market position) – by pricing excessively (Ofcom’s review said it priced “above the competitive level,” but that will be for the court to decide).

However, retail broadband ISPs and phone providers ultimately have the freedom to set pricing however they so choose, albeit often restricted by the realities of natural competition (i.e. making your service too expensive or too cheap can be counter-productive). But this may be less relevant where cases involving the Competition Act and dominant players are concerned.

Similarly, it may be worth noting that many other providers were adopting similar pricing to BT during this period, since there was a tendency for rivals to roughly mirror the national operator’s approach to land-line pricing. Seeing how the court will approach all of these varying factors is going to be truly fascinating.

One possible risk here, should the case succeed, is that it might discourage big operators, particularly those deemed to hold a dominant market position, from making similarly pro-consumer voluntary commitments to Ofcom on pricing in the future, for fear of leaving themselves exposed to such claims. The outcome of that might then give rise to a future featuring many more protracted legal cases before Ofcom can push through key changes.

The outcome could also have an impact on a series of other cases in the UK telecoms space. For example, last year saw economic consultancy firm Fideres accuse Ofcom (here) of “tacitly allowing” TalkTalk, Virgin Media (VMO2) and other voice-only landline providers of overcharging consumers by up to £200m since 2009 (£100m by TT, £50m by VMO2, and a further £50m by smaller providers).

At the same time, mobile operators including EE (BT), Vodafone, Three UK and O2 (VMO2) are facing a class action claim worth “at least” £3.285bn from consumer rights champion Justin Gutmann and the law firm Charles Lyndon, which accuses them of historically overcharging for mobile handsets beyond the end of their contractual term (here). But this is obviously a bit different from CALL’s case against BT.

UPDATE 15th Jan 2024 @ 11:44am

We’ve got a couple of clarifications. Firstly, the claim is now for £1.3bn in damages (following changes to the calculations as a result of data disclosed to CALL by BT) and, secondly, the court expects to finish hearing evidence by 1st March 2024, but the trial itself does not finish until 21st March. Affected customers could be owed damages ranging between £300 and £400 (or more) if the case is successful.

The case concerns two groups

➤ The first group, made up of over 1.5m customers, just took a BT landline phone but no broadband. An Ofcom investigation estimated that these customers were overcharged by up to £84 a year. In 2018, BT cut bills accordingly, but did nothing to compensate customers for the many years of alleged overcharging that took place prior to this.

➤ The second group, made up of over 2m customers, took a landline and broadband, but under separate contracts. These customers paid substantially more than those who took exactly the same services but bought them as a single discounted bundle. They have received no compensation at all.

The campaign notes that more than 500,000 of the customers who only had a landline phone have already passed away. However, if the case is successful, the estates of these deceased individuals will be able to apply for compensation. The trial is likely to last 8 weeks and the claimants hope to receive judgment during the course of 2024.