This latest move by BT (see the
BBC release) challenges the presumption. It also begs some fundamental questions of it, and Ofcom who “exists to further the interests of citizen-consumers as the
communications industries enter the digital age”
The implications of BT's change
in its structural pricing policy is profound. By increasing its fixed charge by 10.5% to the millions of ‘citizen-consumers’ -
low end users, and those on low / fixed incomes will be particularly hard hit. Take a look at table below: which
provides some examples of the impact on line rental costs per call.
All examples based on line rental costs of £10.50 plus VAT or £11.75 per month and exclude call costs
10 calls a month – emergency
only
175p per call
30 calls a month or 1 a day
39p per
call
60 calls a month or 2 a day
19p per
call
120 calls a month or 4 a day 10p per call
240 calls a month or 8 a day 5p per call
The table illustrates how important
line cost charges are to BT and how significant they are to the total bill of anyone with a land line telephone: The BBC’s table suggests it accounts for over 60% of our average bill. Not surprisingly therefore
some argue that BT’s monopoly, and by default Ofcom’s prospective approval, endorses a regressive tax that
hits the poorest most.
But what of the politics of this?
Some might argue BT’s strategy
is the antithesis of a thoroughly modern Britain as Gilbert and Sullivan wrote, and Tony Blair once espoused. If the public react similar
to the recent Council Tax increases, Ofcom and the Government’s ability to fairly regulate the free market,
could well be questioned.
… and the economics for competitive Britain?
Today, coincidentally, Microsoft was fined 1% of its turnover, a mere £600m, I believe, for inhibiting fair competition and effectively
cutting the ground from under its competitors feet.
With BT’s so called ‘ransom
strip’ owning your line to the exchange they are effectively free to charge what they like for the line, providing they
can convince the regulator of its case, despite the fact that alternative call carriers transmit your call to its destination,
anywhere in the world. Now that has got to be crazy, surely?
Furthermore, most of the alternative
call carriers have to invest in their own networks or buy line capacity from BT Wholesale on a long term contracts. Having
done so, BT now comes along and undercuts their prices by changing the ball game … de facto long term contracted line
revenue and reduced attrition of its customer base. Great if you’re are a BT shareholder in the short term, surely bad
news for the industry … and ultimately a customer / ‘citizen-consumer’ in the long run.
So where do we go from here?
Logic suggests, that if Ofcom go along
with further increases, using the same rationale we could all be BT subscribers enjoying totally free calls. The only problem
is that we will have killed off the competition and could be paying £25 a month for the privilege. Now argue the equity of
that with a low use pensioner already reeling from the latest round of Council tax increases.
If you feel a call to Ofcom might
help, why not give them a ring on 0845 456 3000,
or email contact@ofcom.org.uk.
Alternatively why not draw this article to the attention of your local press editor
& get them to dig deeper!
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