The costs of residential phone and broadband services have never looked cheaper, as cut-throat competitors and industry incumbents slash prices to win over customers. But nothing is as simple as it seems, warn industry experts, and it pays to look beyond the headlines for the best deals in town.
Last week, Carphone Warehouse fired the latest round in the home phone wars with the launch of its TalkTalk plan, in what is being touted as the most aggressive attempt yet to challenge BT's dominant market position. All calls between TalkTalk customers will be free of charge, regardless of time of day or duration. The programme includes calls to all local and national talktalk users, with plans to extend the service to TalkTalk customers in Europe later in the year.
The TalkTalk launch comes in response to recent aggressive price changes by BT, which abolished its standard monthly line rental package in favour of a more "all-inclusive" pricing scheme. Existing standard customers were automatically moved to the BT Together Option 1 package, which charges an increased monthly line rental in return for lower call charges. Users will now pay just 3p a minute in the daytime and 5.5p for up to an hour per call in the evenings and weekends, compared with as much as 60p for local calls at the old rate.
Although BT claims it is just trying to simplify its tariff, the move is being criticised by competitors as an under-handed attempt to win back customers who have switched away in recent years to discounted carrier pre-selection (CPS) providers like Carphone Warehouse, One.Tel and Tesco. CPS customers are still billed by BT for line rental but receive a separate bill for their call charges from their CPS provider, often locking in huge discounts on local, national and international rates.
When BT announced its new charging structure, many CPS providers, including Carphone Warehouse, were infuriated, as their customers stand to lose the most from the changes. CPS customers, who still pay BT for their line rental, will see their monthly line bill jump from £9.50 to £10.50.
The row has raised eyebrows at Ofcom, the telecom regulator, which announced this week that it would review BT's new pricing scheme to see if it contains anti-competitive behaviour.
Despite their aggressive price cuts, neither BT nor TalkTalk are the cheapest providers in the market, according to research by uSwitch, the independent price comparison website. The One.Tel CallSaver package came in as the cheapest plan for the average telephone user, costing £229.77 annually, compared with £234.22 for TalkTalk and £243.36 for BT's Together Option 1 plan.
To find your optimal home phone provider, it pays to take the time to figure out your calling patterns, then visit the uSwitch.com website, which provides advice on the cheapest calling plan based on your personal needs.
The market for residential broadband services has quickly expanded in recent years, as web-users ditch their dial-up connections for the joys of high-speed internet access. Broadband is, on average, 10 times faster than a telephone internet connection, not to mention more reliable, with a range of beneficial features. But it's also far more expensive. While service and speed continue to improve, the average cost per month continues to hover around £25-30 for most home users with hefty connection and modem fees of £100 or more.
The popular BT Yahoo! broadband package offers a standard 512 Kbps connection for £29.99 per month. The company is currently waiving the one-time connection and modem fees - a saving of £135 - to pull in new customers.
In a move to attract tentative surfers, the London-based Metronet is offering a pay-as-you-go scheme, charging from £10 to £23.99 per month, with a one-off activation fee of £59. Sebastien Lahtinen, co-founder of ADSLguide, an independent information website, says: "Pay-as-you-go can be good value, but only if your broadband use is very limited. Check out your upgrade options if your use increases."
'I'll never go back to BT'
Terry Birkman, a retired businessman from Essex, says he saved over £5,000 on his phone bill last year by switching from BT to GoTalk, a discount carrier pre-selection provider.
Terry, who racks up hefty bills each month calling his girlfriend in the Seychelles, says he has slashed his bills from £800 a month with BT to £200-£300 with GoTalk. He says he'll never return to BT as a calling customer. "I'm saving tons of money, and the customer service with GoTalk is excellent."Reuse content