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BT announces price hikes

From 1 October, BT’s land line rentals will go up by 50p. The rates for daytime calls to landlines, which are not included in subscriber’s monthly plans, will also rise drastically.

According to Monday’s announcements, the rates for non-inclusive daytime calls to landlines will increase almost 13 times, from 0.5p to 6.4p per minute. The set-up fee per call will also rise to 10.9p from 1p, and the call return charge will be set at 16.5p instead of 4.2p.

The previous government had proposed a monthly levy of exactly this amount, a move that was designed to subsidise the deployment of next-gen fibre-based broadband to rural areas that were commercially unviable for private broadband providers. The idea was eventually shelved.

BT has however said that this is just "a coincidence", and that the raise is intended to ensure that the company can “stay competitive in these recessionary times." BT hopes that the move will help the company “offer discounts and competitive pricing going forward".

The company claimed that the calling patterns of its clientele will mean that the increased set-up fee and daytime rate will not affect its customers greatly. More than 50% of BT clients are on monthly call plans, and do not pay charges for most single calls.

Mark Giles, an analyst with Telco consultant Ovum, said the highlight of the previous financial year for BT was its success in increasing its margin by cutting costs. He suggests that this rate hike, which comes after recent announcements of a pay deal with the CWU and a wholesale price hike for sport content on BT Vision, is clearly an attempt to maintain this upwards curve. However, he warned that BT should be careful that it does not alienate clients by forcing contract-bound customers to pay more for its services.

With imminent cuts in UK's mobile termination rates (MTRs) in view, BT has announced plans to lower its prices for calling mobiles. The company was a strong proponent of the MTR cuts, which allows a fixed or mobile operator to connect their customer's calls to another mobile operator's customers at lower rates. BT spokesperson said that the company is getting ready to introduce “all-you-can-eat packages”, and will be launching monthly plans that include calls to mobile phones.

BT is will be running a limited offer until 29 October, which will offers subscribers annual savings of up to £45.60 if they pay for the next year’s line rental upfront.

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