PS Consultants - ideas & solutions

Telephone charges: confused? You soon will be!

I’ve had fun with telcos this month. I carried out an audit on some business phone lines and found that one number that had been charged for the past 2 years had ceased to exist to such an extent that the local exchange had “recovered the pair”.

Whoops, it's a fair cop guv’nor, and a £700 refund.  But then I found that a certain cable telephone provider had overcharged by an order of magnitude (ie 10x) on certain items on a business bill for 3 years. Possibly as much as an £8,000 refund is currently being argued over. And the total bill in that time shouldn’t have been much more than £10,000!

Anyway, basic errors and stupidity apart, thanks to the miracle of modern technology, the marginal cost of a telephone call to the services supplying them these days is generally less than 1p a minute almost anywhere on the planet. This means that the sole objective of any telco these days is to be able to produce the most confusing possible set of marketing messages so that consumers cannot make straight choices when picking a supplier.

Ironically, BT's pricing is very simply stated at, and they can sit back and relax while the competition confuses hell out of the punters, since when thoroughly confused, people will tend to do nothing, which suits the incumbent supplier (generally BT) very well. However, compared to any of the low cost switchers, BT's overseas prices are laughable - although maybe BT realises that the advent of Voice over IP (VoIP) will make a monkey of all circuit switched telephony soon enough not to bother to fight over the dying embers of an industry that's about to disappear anyway. 

Meantime, TeleWest are fairly typical of a cable telco when it comes to avoiding the awkward issue of where they stand in the marketplace. I tried long and hard to get a price list from them (you look at their website and see if you can find it), and when I eventually dug in and insisted, I think I can understand why. It's far too blunt and not couched in the misdirection that their marketing department struggles so hard to sprinkle throughout the rest of the web site.

The international rates come in two flavours – “Normal call” and "ISDN". The Normal call charge to the USA is 11.33p per minute; but the ISDN rate is 40.22p per minute. Excuse me? That's right, four times as much on ISDN than “normal”, and there is a footnote on the tariff that says:

“ISDN allows the transfer of data and large files. Voice calls to international destinations over ISDN will be charged at normal call rates.”  I guess this means that voice is usually compressed into 25% of the 64k ISDN channel, but it’s all a bit vague.

Call aggregation and redirectors like OneTel makes a great fuss of how much they will save you when you want to call overseas - it costs 55p a minute to call Madagascar compared to BT's 135p a minute. But then OneTel does its best not to trumpet the news that the BT weekend UK National rate (which I suggest you are more likely to want to use than the Madagascar line) is 1.5p per minute, while the OneTel rate is 2.5p per minute.

And then there are the various call saver plans that all make it impossible to form a simple comparison between one supplier and another. Some services like OneTel’s flat rate Total UK Calls at £14 a month for all UK calls are only applicable to “residential users (as detailed in our applicable terms and conditions) using One.Tel as their sole calls provider via either a Phone.Pal or Select.”

If you can avoid the plethora of obscenely over-priced phone services – some of which charge as much as a 149p premium per call – and avoid using the directory enquiry service, then your landline phone bill will never have been cheaper. Also, the emergence of Voice over IP means that charges are set to drop even further quite soon, since you will be able to make calls via your always-on DSL internet connection.

But just as deregulation and competition in the power supply industry has lead to a vicious price war that has caused blackouts in the US and UK as a result of operators running their assets without too little safety margin and spare capacity - so deregulation in telecoms will inevitably lead to a crumbling service unless we are very careful.  So whilst the efforts to confuse customers are tedious, a "straight fight" between competing service providers implies transparency that would end in all telcos cutting their own and each other's throats, because there will always be one eager/stupid enough to buy market share by offering services at or below cost to attract users.

Meantime, while the cost of telephone calls plummets, the price of PCs dive, and just about everything else in the shops remains remarkably static - your council tax bill will most likely have gone up another 20%+ this year, like it did last year, and the year before that. So how on earth are we going to get local and national government into the same competitive world that the rest of us now have to live with?