Satisfaction with phone giants hits all time low

After a year blighted by hidden charges and price rises, home phone customer satisfaction has hit its lowest level since 2006.

The 2008 Home Phone Customer Satisfaction Report by uSwitch.com, the independent price comparison and switching service, based on the responses of over 10,000 home phone customers, reveals that over a quarter (26%) are not satisfied with their phone company – a drop of 4% in less than a year. The UK’s largest home phone company, BT, has come bottom of the poll for the first time ever with a record number of customers (30%) not satisfied, while the UK’s second largest company, Virgin Media, comes second to last with over a quarter (27%) of its 4.1 million customers not satisfied.

Best Home Phone – just 18 months since Sky launched its home phone service, the company has been voted ‘Best Overall Provider’ with 85% of its customers satisfied. Announcing its one millionth customer in February 2008, Sky Talk is the fastest growing home phone company, offering competitive prices to customers taking up its TV service, backed up by strong customer service. It has swept the board in the uSwitch survey, winning 7 out of 11 categories including Best Customer Service, Most Likely to be Recommended and Best for Ease of Use.

For the third time running, TalkTalk has come second overall in the poll satisfying nearly 8 out of 10 (79%) of its home phone customers. TalkTalk wins three categories, including Best Value for Money for the fourth time running. Since the Carphone Warehouse launched the TalkTalk landline company in 2003, it has always ‘guaranteed’ that its bills will be cheaper than the equivalent with its rival BT. Since the report, however, TalkTalk has announced increased call rates from May 2008, as well as a new £1.25 a month charge for customers receiving paper bills, hitting an estimated 1 million customers.

Worst Home Phone – For the first time ever, BT has been voted bottom for Overall Customer Satisfaction in the uSwitch survey. BT is the UK’s largest home phone company with a 43% market share and over 10 million customers – of which over 3 million (30%) are not satisfied. The company has come last in 9 out of 11 categories, including Value for Money for the 5th time running.

BT has come under fire over the last 12 months for new charges it has introduced on top of increased line rental and call rates for some customers. These include an £18 a year administration fee for 3 million customers not paying their phone bills by direct debit and missing out on a £15 a year discount for 9 million customers receiving paper bills. On top of this, since 1st April, BT customers have seen daytime call rates rise by 23%. Yet, despite a record number of dissatisfied customers, there remains a loyal base of over 6 million who have never switched away.

Last year’s winner, Tiscali, has fallen to third place with 77% of customers satisfied, a fall of 10% since 2007. The company added 650,000 telephone customers to its portfolio, more than doubling its numbers, when it acquired Pipex in July 2007. Since then, it has focused its efforts on migrating Pipex customers onto the Tiscali network, while at the same time upselling Tiscali products to the increased customer base. Unfortunately, this may have resulted in it taking its eye off the ball - its customer service score has dropped 8%, with almost half its customers not satisfied (47%).

Customer Service – Overall, 10 million customers (43%) are not satisfied with the customer service provided by their home phone company. TalkTalk has come bottom of the category with just half of its customers satisfied, a drop of 2% since last year, indicating that the company still has a way to go towards achieving its ambition of leading the way in customer service initiatives. Virgin Media has also seen its customer service score drop to 54% from 58%, leaving almost 2 million customers unhappy with the service they receive.

An estimated 400,000 Virgin Media customers on the ‘M’ Talk Weekends tariff were hit by price hikes in November that saw bills rise by up to 13% - the equivalent of £20 a year – with call rates to UK landlines increasing by 8% and connection charges rising 17%. On top of this, all Virgin Media phone customers have witnessed higher rates for 0845, 0870 and mobile calls, which have risen by as much as 158%, due to the removal of weekend pricing. Virgin Media has dropped 3% in overall satisfaction since 2007 and now, along with BT, is ranked in the bottom two for Overall Customer Satisfaction and Value for Money.

The lowest overall scores in the uSwitch survey are seen in the category ‘Best Deal for You’, assessing whether customers feel their provider has placed them on the most appropriate call plan. Despite the major price restructures instigated by BT and Virgin Media, designed to encourage more customers onto ‘all you can eat’ calling plans that commit them to a fixed monthly calls package, fewer than 1 in 2 customers (45%) are satisfied that their provider has them on the best deal.

Tim Wolfenden, Head of Home Services at uSwitch.com, comments: “The younger phone companies are easily outperforming the traditional incumbents. Sky may have swept the board in the home phone survey but its strong performance in our recent broadband poll demonstrates its commitment to delivering a consistent service across more than one product area.

“Unfortunately though, many loyal home phone customers are now finding themselves paying more for a service which, they believe, has declined. On top of the recent hikes to line rental and call charges, 13 million customers are being stung by additional fees of up to £237 million a year simply for receiving their bills by paper or paying by methods other than direct debit. It’s extremely disappointing that, 24 years since the market was deregulated to increase consumer choice and reduce prices, phone companies are still not getting it right.

“The key point is that loyalty does not pay, and it’s now up to the 7.5 million customers who have never switched to make competition work for them and vote with their feet. Switching home phone is a very simple process and by shopping around for the best deal, consumers could save up to £200 a year.”