Your landline is too expensive!

Why pay line rental of almost £167 a year to BT, when far cheaper options exist?

In its latest financial results, BT revealed that 24.8 million landlines are connected to its network. In other words, almost every UK household has a BT landline.

What's more, it doesn't matter to BT whether a landline user subscribes to BT or signs up with its rivals, such as Sky or TalkTalk. BT makes money regardless because it owns the landline network, so it charges fees to alternative providers for using its network. (Thanks to its cable network, Virgin Media offers a genuine alternative to BT, but reaches only 13 million households.)

Costly line rental

Thanks to its near-monopoly on landlines, there's very little competitive pressure on BT to bring down its monthly fees for line rental. As a result, line rentals have been steadily increasing for years, subject to approval by telecoms regulator Ofcom.

Hence, most British households pay BT line rental of £13.90 a month, or £166.80 a year. However, you can reduce this by £46.80 a year by using Line Rental Saver, which involves paying a year's line rental in one go, costing £120. Even so, this works out at £10 a month, which I think is a steep price to pay.

More rip-offs from BT

Alas, when I look at BT's tariffs and other charges, all I see are more rip-offs:

1. Want a paper bill each quarter? That'll cost you an extra £18 a year.
   Want to pay by cheque or card, instead of direct debit? That'll be another £21.60 a year.
   Want to make a five-minute local daytime call not included in your call package? You'll pay a connection fee of 12.5p, plus five minutes at 7.6p per minute. That's 50.5p for a short local call.
   With Line Rental Saver, if you don't make at least two calls a month, that'll be £1.50 extra.
   Want Call Barring, Call Divert, Call Waiting, Caller Display or Ring Back? Each will cost an extra £3 a month, although savings can be made if you take three or more.

BT's call packages

One way to get better value from BT is to sign up to a call package or broadband deal.

With the basic package, Unlimited Weekend Calls, you get free calls lasting up to an hour to geographical numbers (starting 01, 02 or 03), 0845 and 0870 numbers at weekends (from midnight Friday to midnight Sunday). During weekdays, calls to UK landlines cost 7.6p a minute in daytime and 1p a minute in the evenings (7pm to 7am). Chargeable calls incur a connection fee of 12.5p.

Rip-off rises

According to recent research, the average yearly bill for a home phone has increased from £183 to £217 in the past year. That's a rise of nearly a fifth (19%) in just 12 months.

Unfortunately, this rip-off doesn't end there. With BT, Sky, TalkTalk and Virgin Media steadily increasing their line rental, call rates and/or connection charges, yearly landline bills could rise by another sixth (16%) to £252 this summer.

These price hikes mean that 23 million households will pay more for their home phones. Ouch!

How to fight back

Why do millions of us stick with BT, even though it is one of the UK’s most expensive landline suppliers, as well as usually coming bottom of customer-satisfaction surveys?

I suspect the answer is inertia, which is marketing-speak for laziness. Also, most adults have never switched landlines and fear that this would be a complicated, drawn-out procedure.

Obviously, with thousands of different combinations of packages on offer, it's impossible to do this legwork yourself.

However, using online-comparison websites such as HomePhoneChoices (approved by Ofcom), you can get free, unbiased and comprehensive advice on call costs, line rental and packaged deals. In addition, you can add on broadband and/or digital television for even bigger savings.

Best Buys for light users

In this new age of austerity, every penny counts, so it makes sense to shave as much as you can off the cost of your home phone.

Of course, with such a vast range of different tariffs to choose from, it's almost impossible for me to cover the Best Buys in every area.

That said, here are five Best Buy tariffs courtesy of HomePhoneChoices, plus BT's cheapest deal for comparison:

1. Minimum call charge of 11p. This offer is exclusive to HomePhoneChoices

2. Minimum call charge of 11p. This offer is exclusive to HomePhoneChoices.

3. Minimum call charge of 9.5p. First two months of line rental FREE (offer ends soon). Choose a ‘Golden Destination’ for an extra discount.

4. Minimum call charge of 9.5p. £40 credit to your account. Donation to charity The Tree Council for every sign-up.

5. Minimum call charge of 10.9p. Free weekend calls to 0845 and 0870 are included in this package.

6. Minimum call charge of 12.5p. You must pay £120 by card for 12 months' line rental. Free weekend calls to 0845 and 0870 are included in this package.

As you can see, the cheapest line rental comes from the Primus Line Rental Saver, which charges £6.79 a month. This saves £85.32 a year on BT's standard line rental. What's more, with call charges lower than BT's, most Primus customers save money on calls, too.

Heavy users should shop around

However, heavy users (and those who frequently call mobile or international numbers) should look around for the best deal tailored to suit their call patterns. Most likely, an all-inclusive call package will work out cheapest for frequent callers.

As services do vary by region, the best way to do this is to type your postcode into the comparison wizard at HomePhoneChoices and let it do the number-crunching for you.

Bundling and other options

In addition, big spenders could save up to £300 a year by bundling their home phone, broadband and digital TV into a single package. We explained how to do this in Save a bundle of cash by bundling.

Furthermore, in this Internet age, why bother paying for phone calls at all? VoIP (Voice over Internet Protocol) packages such as Skype allow you to use your broadband connection to call other broadband users, completely free. This is particularly useful when calling friends and family abroad. Other VoIP providers, such as Vonage, offer low-cost call packages similar to those provided by landline providers.

Finally, before switching and saving, be sure to look into all other charges. For example, you may need to pay a fee for transferring or connecting your new line. Also, carefully check call-connection fees, minimum call charges and call rates to mobiles and non-geographic numbers.

Once you're happy that you've found a great deal, then why delay? Switch and save right away!

More: Make cheaper calls with HomePhoneChoices | Fight back against rising broadband costs | Don't overpay for breakdown cover