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Ofcom to review rising cost of landline phone services

Thursday, December 1st 2016 by Phil Wilkinson-Jones

Ofcom is to review the provision of landline phone services amid fears that elderly and vulnerable consumers are being ripped off.

The regulator is concerned that people who only use a phone line are not getting the same value for money as those who also take broadband or a pay TV service.

The price of line rental has increased significantly in recent years – by between 28% and 41% according to Ofcom’s analysis.

This is despite a 25% decrease in the underlying cost of providing a landline service.

Ofcom said strong competition in the market for bundles – phone, broadband and TV services packaged together – is giving better value for money to many consumers.

But the benefits don’t extend as far as landline-only customers, meaning they are likely to feel the effect of price rises most acutely.

Ofcom’s research also shows that a significant proportion of landline-only customers are elderly or vulnerable people, who are often very reliant on their landline phone, may not have a mobile and are more likely to have stayed with the same company all their life.

The review, which forms part of a wider look at fixed line phone services, will establish whether new measures are needed to protect this group of customers.

The consultation will close on 28 February 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.”

Ofcom welcomed rules introduced by the ASA last month requiring broadband prices to be clearer in ads and to include the cost of line rental.

But it said this was unlikely to benefit landline-only customers and was another reason to review the market.

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