Broadband prices plunge, but line rental costs wipe out the savings

4th February 2015

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The average cost of a broadband package has fallen by 58% over five years, but typical line rental has risen by 49% over the same period.

The new price research from broadbandchoices.co.uk has revealed that, while broadband prices have plummeted in recent years, regular incremental increases to the cost of line rental has left customers paying similar prices to those they were paying in 2009.

Just five years ago the average cost of a broadband connection was £9.05 per month. Fast forward to 2015 and it is now £3.76, a fall of 58%.

However, line rental prices have steadily risen, soaring to their current average of £16.61 per month from just £11.14 in 2009. This is an increase of 49%, substantially outstripping inflation (16.39%) over the same time period.

This has led to frustration among customers over why they are paying line rental at all – particularly when they often do not use their landline phone.

Dominic Baliszewski, telecoms expert at broadbandchoices.co.uk said: “Broadband providers have fought tooth and nail for customers in recent years, resulting in much cheaper packages with all sorts of perks and extras, so it is a shame to see line rental dragging prices back to 2009 levels. Essentially, households are paying almost £200 a year for something they don’t want – just so they can get something they do want.

“Our own research has shown that sentiment towards line rental charges is at an all-time low, with 37% of households admitting they would get rid of their landline altogether if they could and one in 10 admitting they don’t even have their home phone plugged in.”

Increasingly, broadband services are being taken as part of a bundle that includes television as well as home phone services, which can exacerbate the problem even more as customers struggle to identify exactly how much they are paying for each component of their bundle.

With more quad-play bundle launches (packages that combine broadband, TV, landline and mobile phone) on the horizon for 2015, things could get even more confusing.

Baliszewski added: “Line rental is now a significant household bill so it is high time that pricing was made more transparent.

“As long as line rental is compulsory for the delivery of a fixed line broadband connection, the price of line rental and the broadband package itself should be combined to give a clearer picture to customers of the total cost they will pay over the duration of their contract.

“We’d like to see the entire market working together collectively to make a combined pricing structure the industry standard, as it is unlikely that one provider will make the change before everyone else for fear of looking like the expensive option.”

 Anyone who feels like they are paying too much for their broadband and line rental can follow broadbandchoices’ quick steps to cutting costs:

•       Pay line rental upfront: Several major providers, including BT and TalkTalk, will offer a discount if you pay 12-months line rental in one go. This can save you up to 20% compared to paying it monthly, so it’s worth doing if you can afford it. Check the terms and conditions though, as some of these discounts can change the terms of your contract (e.g. inclusive calls are revoked).

•       Go for value: It’s the start of 2015 and several providers are offering significant discounts for new customers, amounting to what they call ‘free’ broadband. Obviously customers will still have to pay line rental so it is not really ‘free’, but the overall cost is still very cheap. Before signing up to anything, always shop around first to see what is available in your area and make a decision based on your needs as a broadband user.

•       Opt out of line rental: If you want to eliminate line rental from your household bills altogether, there are some ‘line rental free’ options available although you will need to live in an area that can access Virgin Media’s fibre optic network. This is a superfast package, which means you will get faster speed than standard ‘copper wire’ (or ADSL) broadband but it will also likely be more expensive, even when factoring in the cost of line rental.

•       Try 4G: 4G mobile broadband is still fairly new, but it offers connection speeds that can outpace some home broadband options – the only issue is that data limits are rather stingy, so this isn’t a practical alternative if you’re a heavy internet user. However, if you mainly use the internet for the basics, you may find 4G faster and better value than the traditional home broadband and phone set-up. EE has a deal that gives you 1GB of data a month on a 24 month contract costing just £10 a month, increasing to 3GB a month for £15. To put this into context, 1GB of data will be enough to browse the web, send emails and download music and a few YouTube videos. However, you should avoid any heavy duty downloading, such as movies or big pdf documents.

•       Buy local: In some parts of the UK, small niche providers can be found providing a broadband service for specific neighbourhoods – with line rental completely removed from the equation. For example, if you live in the centre of London a company called Relish will offer 4G broadband designed for your home with unlimited downloads for £20 per month and no need for line rental. Alternatively, Hyperoptic have been diligently connecting up apartment buildings to their own fibre optic network and can now be found in cities across the UK including Sheffield, Manchester, Bristol, London, Birmingham and Nottingham.

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