Watchdog to JT: “Drop your prices”

Monday 30 March 2015

JT could be forced to drop prices after the watchdog found that they were 33% higher than Sure were charging in Guernsey.

The regulator wants to use its powers to force JT to drop landline prices by between 4 and 10% every year for three years, but allow them to factor in RPI – they say that they are also considered forcing JT into an immediate price drop of 33%.

The Channel Islands Competition and Regulatory Authority say that they want the new rules in force by October - some time after full competition comes to the landline market from the start of June – but that they have to go through a full consultation process first.

Cicra’s report found that: “The current price differential of 33% between JT and Sure is substantial without there being any apparent justification for such a significant difference to continue going forward.”

Their consultation on the price controls is due to close on 8 May.

Cicra Chief Executive Michael Byrne said: “While we acknowledge that different market features might support different average prices between jurisdictions, we do not find compelling evidence to explain why Jersey consumers are paying significantly more for their fixed-line phone services than those in a comparative jurisdiction such as Guernsey.

“We are particularly keen to hear interested parties’ views on any price control to be imposed and the length of time over which any price control should be imposed”.

JT have responded to the proposal, with Chief Relationship Officer Tim Ringsdore saying that the pictures in Jersey and Guernsey were different.

He said: “Crucially, the two markets are not the same. This is mainly because JT is required to provide the highly discounted Prime Talk Landline service (which isn’t means-tested) in Jersey to customers over the age of 65, something which costs JT around £1.2m a year. That service means eligible customers are charged just £1.99 a month, representing an 87% discount not available in Guernsey.

“Secondly, in terms of JT’s prices specifically, we haven’t increased our call charges for 20 years, during which time RPI has gone up by 32%. Line rental costs have also increased by less than the rate of the inflation. 

 “Finally, as we’ve said publicly before, the fixed-line element of JT’s business is declining, as customers choose internet-based services to make calls, or just use their mobile. On that point, it’s worth noting that our ‘entry-level’ broadband service is £2 cheaper in Jersey than the equivalent in Guernsey, and that is a high-speed fibre-optic service connecting every home, something which is not being offered by the network operator in Guernsey."