Study finds Ofcom complicit in UK landline customers being overcharged

Bill Contract Tear

UK comms regulator Ofcom forced BT to lower its standalone landline prices in 2018 but chose not to do the same for other landline providers.

Economic consultancy Fideres reckons that has resulted in people who have old-school landline-only deals, unsurprisingly mostly older people, being collectively over-charged millions of pounds. Back in 2017 Ofcom noticed BT (and its competitors) had been increasing its landline-only prices since 2009 and told it to revert to pre-2009 levels. It did so the next year but wasn’t joined by its competitors.

Image: Fideres

The report goes on to note that BT becoming so much cheaper than its competitors didn’t result in the massive gains in market share that you might expect. That implies the standalone landline market is dysfunctional and that, for whatever reason, its customers don’t shop around much.

“Normally, a 37% price reduction by a leading firm would force firms providing the same product to lower prices, but here high barriers to substitution and low consumer engagement seem to have allowed providers to maintain high prices without losing customers,” said Fideres MD Chris Pike. “In other words, Talk Talk and Virgin appear to also hold market power over their customers, allowing them to set excessive prices.”

Fideres reckons BT’s competitors have over-charged their landline customers by close to £100 million since BT dropped its prices, with half of that accounted for by TalkTalk. We can’t see any explanation from Ofcom about why everyone else was exempt from its regulation in this area, but Fideres says it has notified Ofcom and urged it to take action.


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