NGMsGhost wrote on Sep 19
th, 2009 at 5:04am:
My idea of distortion is when everyone's cost for the price of line rental is no more than 10% different on an already very expensive rate or when BT is able to bundle in Caller Display for free with its line rental but nobody else in the marketplace can even begin to compete with them on this.
I address these points in reverse order, to return to topic in conclusion.
The (optional) bundling of Caller Display goes back to “BT Privacy at Home”. This was a fairly elaborate scheme with the objective of getting BT customers registered with the Telephone Preference Service, so that competitors would not be able to pinch them through telemarketing. Others had previously been using that technique of customer retention (often without the customer’s permission) and BT wanted to offer a carrot to ensure that its customers would sign up in droves. It was highly successful to that end.
I do not go along with the suggestion that others cannot compete with bundled provision of “Caller Display” on a line. Similar additional services such as 1471 and 1571, at the basic level, are already generally bundled by all. I cannot see why there must be a different approach to bundling between these three. Basic 1471 and 1571 could easily be unbundled. I suspect that if Caller Display facilities, or even the wonderful “True Call”, become more commonly built into telephone receivers then the line facility will become commonly bundled (as it is on mobile networks where handsets have this feature).
I understand the political concept of free markets serving the needs of service users to mean that prices for a particular service are levelled down to within a very narrow band. (In theory they all become the same, because the provider charging more for the same service gets no business.) This is not achieved when perhaps minor or totally insignificant differences in what is offered from competing providers are associated with a wholly disproportionate difference in price.
Assessment of the operation of a market must consider what “choice” consumers actually need and the extent to which they are realistically able to exercise it. New Labour is not alone in simply pointing to (and promoting) the existence of “choice” and “competition”, as if this must mean that the needs of service users are being served. In many cases, it simply means that failure can be attributed to a particular consumer or provider, which is highly convenient for those who accept responsibility for the overall provision of the service.
The theory of markets is compelling; it is now deeply rooted in much of our politics, and accepted as if part of some universal truth. One may expect the Prime Minister to refer to this when he responds to this petition. Last Monday’s announcement implied that the effect of a ban on premium rate call charges would be achieved through a “marketplace”. (It certainly will not be achieved by the suggested terms of a revision to the GMS contract, unless any sanction for the use of 084 numbers is expressly absent.) With a newly announced extended “choice” of GP to add into a market-driven approach, can we expect patients and telephone service providers to be blamed for any failure of the “ban”?