TalkTalk has changed the terms of its Essentials package, citing the higher wholesale line rental charges it now faces, but has left its monthly subscription of £6.49 unchanged and is to add free services to the package to maintain its appeal for customers.
Earlier this year, Ofcom cleared the way for BT Openreach to hike charges for UK internet service providers (ISPs) which rent capacity on its network. The telecommunications giant had been lobbying for the right to do so for some time, having been barred from increasing wholesale prices since 2005. BT claims that a hike is required to allow it to make a return from the £1 billion it spends annually to maintain the network.
However, since the regulatory change was enacted, providers have claimed that it will impact on profit margins to the extent that they will be forced to hike their prices. Cheap broadband packages would be likely to be especially hard hit, it was claimed.
TalkTalk has retained the £6.49 per month price point that has made its Essentials deal popular with cost-conscious consumers and has opted instead to make strategic changes to the terms of the package. The revised offer will now see the length of call to UK landlines in the evenings and weekends after which customers will be charged drop from 70 minutes to 60 minutes. However, as the ISP is keen to stress, its customers can still enjoy free calls by simply hanging up after 59 minutes of talk time and re-dialling the same number.
TalkTalk has also hiked the cost of renting a landline to £11.25 from £10.50 and has put up the cost of making a daytime local and national call to 4.5p per minute. Additionally, a call connection fee of 8p has been introduced. Meanwhile, the inclusive free calls to 36 international destinations facet of the deal has been excised, with call costs for overseas increased. These will remain, however, up to 25 per cent cheaper than the rate charged by BT.
Finally, the broadband facet of the Essentials package will now include a £5 charge for customers who exceed their download limit of 40GB from June 2nd. However, the generous size of the limit will mean that few customers are liable to go over.
To ameliorate the effect of the changes on its customers, TalkTalk has added new features and services to its low cost broadband packages and help it retain its position as one of the UK’s leading providers of cheap broadband. As of May 1st, it will offer Essentials subscribers free weekday local calls when they sign up for the deal after this date. Meanwhile, on June 2nd it will include calls to 0870 and 0845 numbers among those which can be made for free under its inclusive plans. Finally, parental controls and a 1GB online back-up will be added for no extra charge, while the cost of the Security Boost will drop to £2 per month, also from June 2nd.
A press release from the provider stated: “Due to the changes BT announced at the start of the year, TalkTalk is now making changes to pricing and the overall product to maintain their value proposition in the market.”
TalkTalk has for some time been critical of Ofcom’s decision to allow BT to hike its charges and the effect that this may have on the government’s Broadband for All campaign. Speaking on behalf of TalkTalk, Dr Chris Doyle of Warwick Business School said it would “raise the barrier for lower income households [to get broadband]” and described the move as “puzzling”.