BT has lots of shareholders who want to be paid a dividend every year. The only way BT can afford it is to charge more for their services than they actually cost. The more they charge, the more profits BT makes, and the happier the shareholders are.
Customers are just a source of money. BT doesn't particularly care about them.
Ectophile is correct, BT customers are cash cows.
New customers get all of the sign on perks and to them the new line rental cost is worth paying considering all of the other discounts. As for existing customers -- tough, they're more likely to moan and pay up rather than move on !
I have to say, more fool them then.
I will say to everyone, whenever ANY contract is due for renewal then spend a little while checking what is available to you.
Sometimes (with insurance co's in particular) it even pays not to renew and to sign up again as a new online customer.(perfectly legal).
All companies know that the majority of their existing customers cannot be bothered to keep swapping and untill that changes companies will continue to offer better deals to attract new customers.