August 23, 2014 12:03 am

BT joins rivals by increasing prices

©Bloomberg

BT will raise prices for its phone and broadband services by up to 6.5 per cent in a move that will increase pressure on households struggling with the rising cost of living.

The price rises, which will also affect the nearly 10m homes that rent BT’s lines, will almost double the increase asked for by the UK’s largest fixed-line telecoms group last year.

BT’s move follows price rises by rivals such as Sky and TalkTalk this year, which has caused concern among consumer groups about how households are coping with spiralling costs ahead of any rise in interest rates in the next year.

Worries about the rising cost of living in the UK have also been raised by MPs, who have jumped on the issue ahead of the election. Mobile telecoms groups were last year asked to keep prices lower by Downing Street, while Labour has also been concerned about how telecoms groups are contributing to a “cost of living crisis”.

“Inflation-busting price rises are bad news for cash-strapped households,” said Gillian Guy, chief executive of Citizens Advice. “With the extremely tough pressures on household budgets at present and wages that will continue to stay way below inflation, even a small increase in phone and broadband bills could have a big impact on family finances.”

BT said that not all prices will rise, with headline introductory deals for broadband packages unaffected, while there will new products aimed at lowering costs for some customers.

“BT is sensitive to the tough economic times and we’ve taken care to make sure that low-income customers avoid price increases,” said John Petter, BT’s consumer chief executive.

“We’ve added extra money-saving options for low-income customers and for customers who only want a phone line for calls. Although some prices have gone up, we want to help our customers to find the best value BT option.”

BT said the price changes were not connected to the cost of acquiring rights for its sports channels, which have so far cost the group about £2bn. Last year, the group put line rental up 3.5 per cent.

The price of standard line rental for direct debit customers will rise £1, or 6.25 per cent, to £16.99 from December, while the pence per minute rate for calls to UK landlines and 0870 numbers will go up 6.44 per cent from 9p a minute to 9.58p.

Customers who do not pay by direct debit will be offered a £18.99 service called Line Rental Plus, which will end the need to pay a separate £2 payment processing fee and add additional services, such as faster repair times and protection against nuisance calls.

The set-up fee for landline calls will increase from 15p to 15.97p, residential calls to the speaking clock will go up from 36.6p to 38.97p and call return will increase from 19.9p to 21.19p.

The majority of BT’s customers are on inclusive call packages and do not pay the set-up fee or per minute charges on many calls. BT said that call bills have decreased 14 per cent in the past five years as customers have moved to inclusive packages.

Broadband prices are going up by as much as 6.49 per cent. The cost of BT Basic, the phone service for low-income customers, will remain at £5.10 a month with a call allowance.

BT has introduced a service called Right Plan that will allow customers to monitor their calling pattern for a month to find the best value calling plan.

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