Phone users miss out on savings

Millions of people who rent a phone handset from BT would probably be better off buying one.

That's one of the conclusions of a report on the telecommunications market by a committee of MPs.

The Public Accounts committee says regulators should provide better information to customers and encourage them to shop around for the best deals.

Cost

A basic telephone handset can be bought on the high street for around £7 yet a similar model costs around £18 per year to rent from BT.

The report says consumers could be missing out on millions of pounds of savings because the telecoms market is too "confusing".

It calls on the regulator Ofcom to encourage consumers to switch deals.

"We'd be the first to admit that there is confusion in the market place for consumers," says Gavin Patterson

BT was privatised in 1984, but it still has 70% of the UK domestic market.

The committee argues that the regulator Ofcom should carry out an education campaign for customers to help them save money.

Suppliers

They should also provide guidance on how consumers can identify the best supplier, using a series of typical phone bills as case studies.

In a statement Ofcom has says it welcomes the Public Accounts Committee's report and the committee's interest in the further development of the UK's competitive telecommunications market.

Price comparison

So can you say one supplier is cheaper than another?

There is no average user but based on the annual bill sizes for someone making three calls per day, BT comes out the most expensive at £272.28 per year and Just dial comes out the lowest at £219.57.

Gavin Patterson from BT told Working Lunch:

"We'd be the first to admit that there is confusion in the market place for consumers. There is a barrage of different claims out there making some quite outrageous comparisons versus BT."

"What we're committed to doing is simplifying that for consumers and bringing better value in terms of our prices so what you're being seeing later this week is that we will be making some announcements that make our offering even simpler and even better value."

How to switch

"The best thing to do is to use an internet comparison service," says Jon Miller

Uswitch the company which specialises in comparisons says customers could save £160 a year by changing their landline provider. Jon Miller is director of uSwitch.com:

"Every single consumer has a different calling profile if you make very low amount of calls you maybe better of with BT on their low user scheme."

"If you make a high number of calls particularly international calls then chances are you will save significantly by switching to an alternative supplier."

"The best thing to do is to use an internet comparison service to compare the range of options that you have or at least contact your own supplier and make sure that you're on the best package that they're offering."