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JT faces being forced to ‘substantially’ drop landline charges after the competition regulator found that there was no compelling reason for higher charges here than in Guernsey.
They will be forced to drop prices in real terms over the next two years, and freeze them in 2018, if an initial notice by CICRA is turned into formal action.
JT have this morning contested the imposition of price controls – they say that the competition regulator’s notice doesn’t take account of the £1.2 million that they spend reducing charges to the elderly, that they make a loss every year on landline services already, and that after just six months of competition in landline services it’s too soon to make a change.
The initial notice by CICRA would also freeze charges in Guernsey by Sure, the dominant operator there.
In a statement, CICRA Chief Executive Michael Byrne: “While the costs associated with landline services in Guernsey and Jersey are similar there is no compelling evidence to explain why Jersey consumers are paying significantly more than those in Guernsey.
“JT in Jersey will be subject to a more stringent price control that will have the effect of reducing overall prices in Jersey to a similar level to those seen in Guernsey over the next two years.”
The notice says that in 2016 and 2017, JT’s landline costs should come down by RPI minus 7%, and that they’d be limited to RPI in 2018.
Daragh McDermott, JT’s Corporate Affairs Director, said that they would be discussing the proposal with the regulator in January, and that the notice appear to have missed crucial points.
He said: “It appears that the regulator hasn’t fully considered the fact that JT offers a hugely discounted (83%) landline price which is accessed by more than 15,000 senior citizens - something which isn’t offered either in the UK or Guernsey.
“JT currently invests about £1.2m every year to provide that discount. When taking that discount into account, the average landline price in Jersey is actually on a par with Guernsey.”
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