Vodafone drops its line rental charges to rival TalkTalk on pricing
Vodafone has scrapped its line rental charges as part of a move to command TalkTalk's lower-end market. By doing so, the telecoms company aims to re-position itself and compete on pricing; however, this move means that the company will have to absorb significant costs as a result.

Vodafone has scrapped line rental charges as it tries to muscle into TalkTalk's lower-end market – and comply with imminent regulatory changes for an all-in-one price for broadband and phone services.

Under the move, rental charges will no longer apply for new and upgrading fibre optic home broadband customers, which means users will not have to pay for landline connections to receive internet access.

From October, the Advertising Standards Authority and regulator Ofcom will require providers to advertise their service prices by including the cost of line rental into their total monthly fee.

Paolo Pescatore, Director of Multiplay, CCS Insight said by abolishing its line rental, Vodafone is trying to differentiate itself on pricing.

He said: "Vodafone announced its return to the consumer broadband fixed line market last year - and without being unfair that move was never going to set the world on fire. It's a cut-throat market, with lots of bundled content thrown in. For example, EE had previously failed to make a dent in market.

"Without any TV content it had to do something novel and this is an opportune moment given that Ofcom and the ASA working to provide simpler and more transparent market."

He added the scrapping of the line rental charges would amount to significant costs for Vodafone to absorb.

"This is a big threat to TalkTalk, which is already losing subscribers, and hasn't yet recovered from its security hack."

However, Ewan Taylor-Gibson, broadband expert at uSwitch.com, said Vodafone has offset some of the cost by increasing the overall price of its product.

He said: “It won’t be long before this way of pricing becomes the norm across the whole broadband market - although Vodafone should get a pat on the back for being the first to take the plunge.

“Compared to other fibre deals on the market, Unlimited Fibre Broadband 38 is competitive, with the only frustrating thing being that it ties users into an 18-month contract - longer than the current standard.”

Glafkos Persianis, commercial director at Vodafone UK said: “We started our journey into fibre optic home broadband just over a year ago and are delighted to show that we are a truly innovative and customer focused provider.” ®