Standalone landline services probed amid value for money concerns
Ofcom said that while competition in the telecoms sector remains strong as consumers are getting better value for money in recent years, it’s concerned that people who buy landline services on their own “aren’t being served well by the market”.
Its analysis found that all the major landline providers (BT, Post Office, Sky, TalkTalk and Virgin Media) had increased their line rental charges significantly in recent years – between 28% and 41% in real terms.
This is despite a 25% fall in the wholesale cost of providing landline services.
Ofcom said the price rises are felt more by those on standalone landline services and they don’t benefit from strong competition seen in the bundled communications sector, where landline, broadband and sometimes pay-TV services are packaged together.
As the elderly and vulnerable make up a significant portion of standalone customers, Ofcom said this group is more affected and they’re more likely to have stayed with the phone company all their life.
The regulator said its review will look at whether measures are needed to protect this group of customers and depending on its findings, it expects to publish a consultation in early 2017.
Jonathan Oxley, Ofcom’s competition group director, said: “Our evidence shows that landline providers have been raising the price of line rental, even as their costs have been coming down.
“We’re particularly concerned for older and vulnerable customers, who rely on their landline and are less likely to change provider. So we’re reviewing this market to ensure these customers are protected and getting value for money.”