After much effort BT seems to have finally backed down from it’s proposed increase of the Premium Rate Bad Debt charge proposed increase from around 3% to an enormous 9.7%, if it had come into force in April this year it would have had catastrophic consequences for many premium rate providers especially re-sellers who depend on the few pence margin on each minute/call to survive.

BT proposed that it needed to take a cut 9.7% out of every premium rate call (numbers starting 090) to combat the amount of bad debt it was receiving with customers making the calls and then not paying for the 09x phone calls. Almost every network operator in the country challenged the increase and even after BT announced in December 2009 that it was coming into force in the last two weeks BT has forwarded a further letter to telcos informing them that the change will NOT come into place as intially planned.

The effect would have had a knock on effect for consumers who may have found that their most popular premium rate services X Factor, Strictly Come Dancing voting services may have increased the cost to call the voting lines to make up for the reduced revenue that providers would receive. The rate would have meant that on a £1.50/min service the networks would receive an 8p reduction in the rate they received and with many providers relying on a few pence margin to make their promotions worth while it would have caused a huge impact on the Premium Rate Market that has gone from £2bn a year to £800m a year in just 2-3yrs.

It is beleived that BT Wholesale will be back with a “Revised” bad debt rate although for the time being networks can breath a sigh of relief that Ofcom shot down BT’s 6.7% increase.