On Sunday the 26th of July, BT customers received an email notifying them of an increase of £1 in the retail pricing of its line rental. BT is linking the increase in line rental to giving customers more content. In its email to customers BT writes:
“We’re always looking for ways to give you more. That’s why we’re introducing things like the chance to double your data, AMC, our brand new US drama and movie channel and our best ever online protection – all for free.”
But it’s not free at all; BT’s email continues:
“So, from 20 September 2015, line rental is going up by £1 per month.”
It becomes increasingly difficult for consumers to buy unbundled products and they are forced to pay for something their do not want because they prefer to source their content from other providers, e.g. Netflix or Apple. So “Free” is the wrong word. The right term is “included in the price”. If the new show, AMC, is really free, then surely even non-BT customers would be able to view it for free. Clearly this is not the case.
Furthermore, with BT’s proposed acquisition of EE, what we see today with fixed broadband may well happen with mobile broadband.
This is of course not only a retail market issue. BT’s competitors and content providers not linked to BT are rightly worried about the effect on competition. In this context BT’s email announcing price increase for an access product justified by bundled content is the “smoking gun”.
The UK regulator, Ofcom, currently has two consultations under way. One concerns the split of Openreach and BT and other is the “Strategic Review of Digital Communications”. Ofcom may wish to look at the issue with the view to ensure that consumers can purchase a content free access service which is priced accordingly. As regards mobile broadband, while Ofcom is rightly reluctant to act ex-ante, it might be worth devoting a chapter in the Strategic Review to unbundled mobile broadband and how one might preserve a well-functioning mobile broadband wholesale market.
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