Yet more rises with no extra value

Is BT desperate to lose customers? I'm no longer one of its many millions of landline users after I defected to Plusnet a while ago after seeing how much the line rental was costing,but now I see it's going up again for those I left behind.

The annual bill for just having a BT line – before you've made a single call – is now £166.80. Three years ago it was £132 a year. So line inflation has been 26% when over the same period the CPI index has gone up 8%.
I've often wondered why the cost of line rental increases. I can understand the initial cost for a line such as installation,raw materials and the expenses incurred for physically putting the line in,but after that what costs are there? Maybe British Gas,Scottish Hydro or their competitors could learn from this and start a pipe rental charge too? After all,if BT can make lots of cash doing it,what's stopping others?

I'm mystified as to what exactly BT are doing at its exchanges to justify such an increase. The obvious answer is that it's upgrading everything for superfast broadband. But surely the cost of broadband should be borne by broadband users, not by the still significant numbers of people, many of them pensioners, who are not on the internet and only use BT for landline phone calls.

BT's last reported profits, for the quarter to 31 December 2010, were up 30% to £531m. The free cash flow was up 69%, while its net debt – the money borrowed to invest in the likes of broadband and 3G – is falling fast. Chief executive Ian Livingstone (bless his heart)has to struggle on with a meagre pay packet of £2m-plus while presiding over steep cost-cutting; the last annual report said wages and salaries were down 7% at BT Group in 2009-2010, "largely due to the impact of labour resource reductions". I think that means jobs cuts to you and me, but no surprise that bonuses were available all round for the board.

The stock market loves it; BT shares have gone from 115p to 161p over the last year or so,but yet the company still feels the need to put up line rental costs not once but twice in the space of just six months. And it has thrown in some above-inflation rises in call connections costs too.

It also looks as if competition is failing in this market. There is now a well-established pattern in which BT's rivals benchmark their landline costs against BT. Within weeks or even days, they match BT's landline price rises. So maybe BT is not so desperate to lose customers. It knows that if you go elsewhere you'll pay much the same.