Tuesday, 16 October 2012

LINE UP – we’re being taken for a ride

This week, SKY announced that it will increase phone line rental charges by more than seven times the rate of inflation from December. The line rental charge will jump from £12.25 to £14.50 a month – that’s 18%. Sky is also increasing the cost of daytime calls, from 7.95p to 8.41p a minute and its call connection fee will go up from 13.1p to 13.87p.

Similarly, BT has announced a rise in line rental charges £14.60 a month to £15.45 from January 2013. And, BT’s call charges will also go up. Full-price daytime calls will rise from 7.95p a minute to 8.41p and the call connection fee will rise from 13.1p to 13.87p.

Virgin and TalkTalk have already implemented way-above-inflation increases in line rental charges, but BT and Sky are the dominant domestic telecoms suppliers.

There are a number of things that strike me about these announcements.

First, what is the justification for these inflation-busting increasing line charge rentals? I can’t think of one. One telecoms supplier – Primus – charges £8.25 a month. It uses the same infrastructure as the other suppliers. Is it subsidising its line rental costs? I don’t think so. So, why are the dominant suppliers charging nearly 90% more for that part of the bill which is inescapable?

Secondly, increasing the line rental charges means that those who make the fewest calls – typically pensioners on the lowest incomes – are facing the highest percentage increases in their bills.

Thirdly, in what the suppliers call a ‘highly competitive market’, how do BT and Sky manage to arrive at exactly the same costs for daytime calls and connection fees? Is it coincidence? I don’t think so.

That’s why I’ve called on the Competition Commission and the Secretary of State for Trade and Industry to launch an investigation into the telecoms’ suppliers and, particularly, these latest announcements.