Author(s): Raghu Gopal
Last week, Vodafone announced that it's eliminating its £18 line-rental fee for new and existing fibre optic residential broadband customers. Vodafone says the move will make it the first broadband provider to offer a "transparent" and "easy to understand" pricing structure (see Instant Insight: Vodafone Removes Line Rental Fee for Fibre Subscribers).
The new pricing strategy reflects the growing competitive nature of the UK's broadband market and consumers' desire to stop paying for line rental, which is seen as an unwanted tax.
Such line charges are the norm in the UK broadband market, an inheritance from earlier telecom days. Today, even broadband-only households are paying to maintain landlines that are increasingly underused and expensive to maintain.
The change means that Vodafone's least-expensive fibre broadband package, Vodafone Unlimited Fibre 38, is now £25 per month (£22 for existing customers). Its 76 Mbps fibre service will cost £28 per month. There is a £49 one-off installation fee for these packages. Customers will still receive a landline included in the price if they sign up for an 18-month contract.
Regulators in the UK have been pushing for such changes. In March 2016, Ed Vaizey, then Minister for Culture, Media and Sport, called on broadband providers BT, TalkTalk, Virgin and Sky to eliminate the line-rental fee for landlines that customers do not use. The Advertising Standards Authority has also been pressuring broadband providers to be clearer about their pricing.
Earlier in 2016, we noted the rise in cord-cutters in the UK (see UK Cord-Cutters Pay for Nothing).
With Vodafone doing away with its line-rental charges, we expect other broadband providers to follow suit. The offer is the latest in an ongoing wrangle between operators to attract new customers and keep existing ones. The move signals Vodafone's desire to compete in a cutthroat market by stealing a march on its rivals.