In October 2012, I called on the Competition Commission and the Secretary of State for Trade and Industry to launch an investigation into the telecoms’ suppliers and, particularly, into landline charges. 1
SKY had just announced that it would increase phone line rental charges by 18%. BT had already announced inflation-busting rises. Virgin and TalkTalk had already implemented way-above-inflation increases in line rental charges, but BT and Sky are the dominant domestic telecoms suppliers. These new charges were almost double those of the lowest-cost provider. There was no justification for any price rise at all.
I strongly made the point that increasing the unavoidable line rental charges meant that those who made the fewest calls – typically pensioners on the lowest incomes – were getting the highest percentage increases in their bills.
Further, I was sharply critical of the suppliers’ claims that there was a ‘highly competitive market’, asking how it was that BT and Sky managed to arrive at the same charges for daytime calls and connection fees. I said that customers were being taken for a ride.
But, what was the response of the Conservative Minister, Ed Vaizey, and OFCOM then? They said that they believed the retail market was competitive and
“… for Ofcom to open up an investigation in this area, it would need evidence of an abuse of a dominant position or evidence of collusion or anti-competitive agreements.”
They refused to budge from this position, despite the evidence staring them in the face.
Then, last week, Ofcom announced a review 2 into “unnecessarily high charges paid by the estimated two million households who pay for a standalone landline service…. Ofcom is concerned that (these) people are not being served well by the market.”
The regulator said that all the major landline providers had raised charges significantly since 2010, by between 28 per cent and 41 per cent in real terms. This was despite benefiting from a 25 per cent fall in the underlying wholesale cost.
Customers have been taken for a ride for the last 6 years whilst OFCOM and the government have been asleep on the job.
1 LINE UP – we’re being taken for a ride, 16th October 2012, http://www.clivebetts.com/