Our approach to this year’s price changes explained
By Nick Lane, MD Customer Services, BT Consumer
We know the cost of living squeeze is something none of us can ignore right now. Major price inflation means our customers are dealing with higher costs on everything they buy, from food to travel and energy bills.
It’s never easy to announce price rises, but that is particularly true this year. So it’s important for us to be as clear as possible as we increase our prices by the contracted CPI 10.5% +3.9% – for a total of 14.4% – for the majority of our customers from 31st March.
This price rise won’t apply to all of our customers, however. We are freezing the price of line rental, call packages, call charges and call add-ons for our landline-only customers – those who do not have fixed broadband with us or with another provider. In addition, our BT Home Essentials, EE Mobile Basics, Pay-As-You-Go, BT Basic and Home Phone Saver customers will see their prices frozen through 2023 as part of our commitment to support those who need it most.
This means more than 3 million customers will not be affected by the change in CPI rates.
For those customers who will be affected by the price change it’s important to put our price change in context. Telecommunications as a sector provides incredible value for money when you think that our customers are using as much as 50 per cent more data every single year. In fact, customers in the UK are some of the highest data users in Europe. At the same time, the cost of their combined fixed and mobile services are among the lowest in the region.
We are also a small proportion of household spend every month – recent research says this is around 3.8%. And, with everything else on the rise, that small proportion is in fact decreasing: the average household spend on telecoms services has fallen by 19% compared with what it was five years ago.
With the CPI rates now published, we expect our price change will mean an average increase of just over £1 a week for most people on broadband or mobile. Meanwhile, costs are going up by considerably more for everything else – energy costs the starkest example – with consumers not getting anything extra for their money. Just the same thing, only more expensive.
Keeping up with demand
Meanwhile, with the demand for faster speeds, and better networks ever increasing, we are investing heavily to keep up with the continuous demand for data (trebled in the past five years, on our network). We have added more than 2,500 square miles of brand new 4G coverage over the past few years, for example, and much of it in the most remote parts of the UK. We are even bringing mobile coverage to some areas for the first time, helping to close the digital divide
We continue to invest when, as a business, many of the costs we are facing are rising way above inflation. Take our energy costs, for example, which have increased approximately 80 per cent over the past year. Component prices for the hardware we provide for our customers are going up. We also have additional costs imposed on us with the requirement to remove high-risk vendors from our core network, - a cost we expect to reach around £500m.
We are determined to look after our people, too, with a £1,500 UK Cost of Living Pay Rise to all but the highest-paid staff that came into effect from January 1st. It’s a consolidated salary increase, not a one-off payment, that covers 100 per cent of our frontline workers and 51 per cent of our managers.
How it works
Our annual price change in line with CPI makes sure we can cover all the increasing costs we face. It is a necessary part of business that we introduced a few years ago across all our Consumer brands with the intention of being fairer and more transparent with our customers.
The metric is simple. It’s based on the Consumer Price Index, also known as CPI, plus 3.9 per cent. CPI is the most reliable measure to track inflation. It compares the cost of a selection of goods – food, clothes, travel – from one year to the next. It’s published monthly. We always use the December rate, published in January, for our annual April price change.
Extra help for those who need it
With the largest and best fixed and mobile networks in the UK, we know we have a responsibility to do all we can to support our customers who need it most. Fast, reliable connectivity has never been as important as it is today, with millions relying upon our networks in their day-to-day lives. We don’t want anyone to be left behind.
We are committed to supporting customers who are worried about their finances and who need extra help. We provide affordable broadband for just £15 per month with our Home Essentials tariff and low cost mobile with EE Basics for £12 – two means-tested social tariffs connecting those on low income with affordable fibre broadband, landline and mobile calls.
Currently, around 85 per cent of the UK’s social tariff customers are with BT. The number of customers taking Home Essentials has doubled in the past two quarters because of proactive conversations with customers we believe are eligible. We currently support nearly 1 million customers with subsidised or discount tariffs like Home Essentials. And we urge anyone who qualifies to get in touch: on the phone, online or in one of our stores.
We’re proud to be the market leader in social tariffs, with the most generous billing and collection policies of any provider. And we’re introducing a package of additional support for low-to-no income customers, as well as investing to keep giving all our customers better value with propositions such as Data Gifting, Stay Connected, Airtime Rewards, flexible TV packages and Inclusive Extras such as Netflix, Apple Music and roaming passes.
Supporting our customers and colleagues through the cost of living crisis is our number one priority. For us, it’s a question of investment in our networks and at the same time helping as many people as we can on our journey to becoming the most personal customer-focused brand in the UK.