BT: Our new pricing structure for the future

By Marc Allera, CEO, BT Group’s Consumer division

Our annual price change is never an easy conversation to have with customers, particularly when so many people are dealing with the increasing cost of living. But it is a necessary conversation to have to help us manage our own rising costs and investments we’re making into networks and customer service, while also protecting those customers in vulnerable circumstances, suffering from financial hardship or digital exclusion.

Following Ofcom’s recent consultation, the way we communicate and charge for the contracts we provide (for both new and re-contracting customers) is going to change.

What are we changing?

We currently use a model that was introduced as part of Ofcom’s Fairness for Customers commitments in 2019 that adjusts customer pricing every year, on 31^st March, by the rate of inflation (CPI) +3.9%.

At the end of last year, Ofcom shared a consultation advising that prices linked to inflation can be confusing for customers, because they don’t have certainty on exactly what their price change will be. They don’t know because inflation can go up by different amounts each year, and isn’t set until the December CPI figure is published in January. They made clear that while price increases within contract are okay, they must be set out more clearly. 

Ofcom is proposing an amended regulation requiring that any price change written into a customer's contract needs to be set out in pounds and pence, prominently and transparently, at the point of sale. That includes being clear about when any changes to prices will occur.

We're listening, and we've taken this on board.

Ofcom will finalise its decision on the proposed requirements in the coming months, with new pricing models in place no later than four months after that.

So, starting in early summer, we will introduce a pricing model consistent with Ofcom’s approach, moving away from % figures and CPI, and offering instead, a clear and simple view of any changes in “pounds and pence”. For new and re-contracting mobile customers we expect this increase to be from £1.50 (for Sim Only and Airtime, for example), and for broadband customers £3.

Until then, we continue to follow the existing rules, with our annual March 31^st price increase of CPI + 3.9% going ahead as per normal.  With the CPI inflation rate being announced tomorrow, most of our customers can expect an increase of a few pounds per month, about the price of a takeaway coffee each month.

Helping people under pressure

Our new pricing model isn’t for all our customers, however. There will be no changes for our customers in financially vulnerable circumstances on EE Basics or BT Home Essentials.

The cost of living and a digitally inclusive society are now more relevant and important than ever. We are continually thinking about how we – and the wider industry – can play our part alongside policymakers to drive meaningful change, at a time when we can see so many people under pressure.

I am proud that we have led the market for many years, first with BT Basic, (for some time the only social tariff for phone lines and broadband on offer across the entire industry), and more recently our fibre-based broadband tariff Home Essentials. Today we provide broadband for 72% of those in the UK who take social tariffs.

At the same time, customers' consumption of data, across the industry, has trebled across mobile and fixed networks in the past five years alone. All this, while telco services continue to make up only a small and declining share of household outgoings, representing just 3.5% of average monthly basket spend.

In real terms, people pay less for their connectivity now than they ever did and get much more. As an industry, we continue to give our customers outstanding value for money.

We’ll continue to offer our customers the best and most reliable connection on our networks, with the latest tech and brilliant UK-based service. And we’ll let our customers know clearly and in good time how the way we communicate and charge for their contracts is going to change.

It’s all part of our ambition to be the most personal, customer-focused brand in the UK.

Follow me on X and Instagram @marcallera