Providers of home communications packages have been accused of operating a cartel akin to that in the energy market following a series of price hikes over the past 18 months.
Several are expected to raise their broadband, phone and TV package costs over the coming weeks, after BT shocked customers by announcing its prices will go up again on 3 July.
Those increases, affecting millions of landline, broadband and BT Sport customers, will be the third in just 18 months.
Previous mark-ups took effect alongside similar moves from Sky, Virgin and TalkTalk, with some households paying up to 50 per cent more for their internet and phone connections.
The latest BT move affects a range of services. Standard line rental will go up by £1 a month to £18.99, standard and unlimited broadband will climb from £13 and £18 to £15 and £20 respectively and calls to landlines and 0870 numbers will go up from 10.24p to 11p a minute.
Line Rental Plus packages, Infinity Broadband deals and BT Sports will also become more expensive.
“Price rises are now a regular event across the telecoms market, with the majority of providers putting up prices every year,” said Ewan Taylor-Gibson, broadband and TV expert at uSwitch.com.
“BT’s increases will be particularly frustrating for customers, given its last price hike was only in September 2015. Not only is line rental going up again, but BT Sport will also see an increase as fans foot the bill for expensive and exclusive football TV rights.”
Sky TV customers will be hit by price increases from June as well, while Virgin Media customers saw their phone, broadband and TV package charges jump by an average of 5.4 per cent in February – well above inflation.
The growing regularity with which prices are increased has drawn comparisons with the UK energy market. The big six energy suppliers have long behaved like a cartel in the way they increase price uniformly and with little relation to their underlying costs. Those accusations are now being aimed at telecoms providers and will intensify if, as expected, other providers follow BT’s move over the coming weeks.
There are concerns around the transparency of pricing too, particularly in the context of broadband contracts. Calls for a competition probe into the market grew louder last week after the Advertising Standards Authority (ASA) ruled that broadband adverts were often unclear and misleading.
It told providers to ensure that adverts show all-inclusive upfront and monthly costs, including line rental, and give greater prominence to the contract length and post-discount pricing.
More than half of people surveyed by Citizens Advice were unable to pick out the cheapest broadband deals when looking through adverts. The charity, which said “broadband suppliers have been misleading customers for years”, also found that some people are paying up to six-and-a-half times more for broadband than advertised.
The challenge of working out the real cost of a telecoms package could become even harder, with providers heavily promoting ““quadplay” deals that also include mobile phone.
Robert McKechnie, managing director of Edinburgh-based independent telecoms company TenTel, welcomed the ASA’s decision.
“The industry should be fair and transparent with line rental costs. All too often broadband and premium TV is being subsidised by increasing landline prices, which means that customers who just want phone services are essentially paying the price for those who want these extras.”
Some of those landline charges are now unfair, said McKechnie.
“Clearly, they have found a way to make up for their lower-priced ‘deals’ by increasing the essential landline cost for the consumer. Increases in the cost of line rental remains an ongoing issue for the consumer with many of the major telecoms providers.”
With prices going up and the true value of a package becoming harder to decipher, the onus is increasingly on customers to do their homework to ensure they’re not paying over the odds.
If you’re affected by a price increase your provider should give you the opportunity to take your custom elsewhere without penalty, even if you’re mid-contract. If that isn’t the case, check your contract for exit fees before transferring to a cheaper deal and make sure the savings offset the charge.
“It’s important to carefully research what’s on offer; it can be cheaper to avoid bundles, especially if you don’t require premium TV, an option many people are turning away from with the advent of streaming TV devices,” said McKechnie.
How to keep your telecoms package costs down
1Prices often increase at the end of a telecoms contract, so it’s worth shopping around at this point to make sure you are not overpaying. Make a note of when your contract ends so you can look for a better deal.
2Make a list of what you want from your broadband, landline or TV contract before committing to anything. Sometimes it makes sense to take out a bundle with one provider as you can make significant savings, but on other occasions you might decide purchasing separate services will give you more flexibility and a better range of TV content. For example, if you only watch TV box sets and movies, a streaming service such as Netflix, with a separate broadband connection, may be the best option for you. If you love watching sport, but only watch the big events, adding daily or weekly passes from Now TV might be more cost effective.
3If you can afford to pay for your line rental for the whole year upfront then opting for a line rental saver option is an easy way to save some money on your broadband bills and make sure you aren’t caught out by any mid-year landline price rises.
4Once you’ve decided what you want from your broadband, TV or landline service, make sure you shop around. There are some fantastic deals to be had so it’s worth doing your research. Don’t just check with your existing provider, explore other options by using a price comparison tool.