Unicom Ignores Supply Elasticity with Comms Warning

Manchester based LCR reseller Unicom has warned small businesses to fix their telecoms contracts for three years in the face of rising prices within the industry.

“The same trend is happening within the telecoms sector as has happened in the energy market, said Chris Earle, Operations Director, Unicom.

“There have been increases from all the energy suppliers over the last two years as the market has consolidated, and the providers have become fewer – wholesale prices have gone up for both gas and electricity but the suppliers have increased their prices to customers much more than they have had to.

“The same is now happening with the telco market – BT has, since April this year, increased the price of a local call by 19.05% and the price of a national call by 18.87%. With the recent OFCOM ruling to release BT from its price constraints we can expect more increases over the coming months.”

Many observers Comms Business Magazine has spoken to seem to be singing off a different hymn sheets as they say Unicom has ignored the basis tenant of suppky and demand.

“In the gas industry the problem that the UK faces is diminishing local supply. No longer are we able to rely on North Sea Gas and the UK is forced to buy supplies on the open market. As a result gas companies are getting raped and consumers are feeling the pain.

No such equivalent exists in the fixed line comms market. Yes, we have had some consolidation, but this is as a result of carriers having their margins squeezed for old fashioned fixed line calls. There is absolutely no shortage of supply or capacity. To suggest that is misleading.”

Only this week and twenty years after deregulation in the UK market BT has slashed their prices on the day price controls were finally removed from the company by the UK regulator Ofcom.

Chris Earle at Unicom goes on to explain his hypothesis; “With de-regulation, there are a number of phases: the first phase is the customer grab phase with a large number of companies fighting to grab market share, which forces the prices down for customers.

The second phase is the market consolidation phase where companies merge and the bigger suppliers buy out the smaller companies and prices stay low. Then there is the third phase, when the larger suppliers try to make profits out of the customers they have acquired, which involves price rises for customers.

The gas and electricity markets are well into the third phase, with a handful of companies supplying the vast majority of customers, and prices going through the roof. The telecom industry is currently going from phase 2 to phase 3, so this may be the last chance to fix prices at the lower prices. Telecom prices will rise over the coming months and years.

Whilst selling gas and electricity on behalf of various suppliers, Unicom arranged for many customers to enter into agreements, fixing their rates for supply periods of upto 5 years. These customers are now enjoying the benefits of fixed low rates and peace of mind after entering into these agreements. Those that did not fix their prices have encountered huge price hikes, and wish that they had.

Unicom’s business customers are currently able to fix their telecom prices by entering into the Unicom 3-year fixed contract. This allows customers to continue running their businesses knowing that they will not be the subject of telecom price increases over the next three years.”