Up to a million BT landline customers will see their phone bills slashed by £7 a month from April, the UK’s communication watchdog has said.
Ofcom in a statement on Thursday said that BT landline-only customers – of which the majority are pensioners – had been getting poor value for money in recent years, compared to those who buy bundles of landline, broadband and pay-TV services.
It said that nearly two thirds of customers with only a landline are over the age of 65, and more than three quarters have never switched provider.
It said that it was concerned that telephone line rental prices had risen, despite wholesale costs falling and had conducted a review into the market as a result, after which it set out proposals to cut monthly bills for BT’s landline-only customers by between £5 and £7.
On Thursday it said that BT had agreed to the changes, which will come into effect from April next year. On average, the cut means that households can save up to £84 a year.
“For many people, their landline is their lifeline,” said Jonathan Oxley, Ofcom’s competition group director.
“But households who only have a landline – and no broadband – have seen their phone bills soar,” he added.
“Many are elderly, and have been with BT for decades. We’ve been clear that they must get a better deal. So I’m pleased BT has responded to our plans in full by cutting these customers’ bills,” Mr Oxley said.
Ofcom said that it had conducted analysis that showed all major landline providers had increased their line rental charges by between 23 per cent and 47 per cent in real terms in recent years. But the underlying wholesale cost of providing the service actually fell by 27 per cent over that time.
It said that of the UK’s 1.5 million landline-only customers, two thirds are currently with BT, meaning that BT has been able to jack up prices “without much risk of losing customers” and other providers have followed.
Ofcom said that it hopes that other providers would now follow BT’s lead again and cut prices.
Richard Neudegg, head of regulation at uSwitch.com, the online and telephone price comparison and switching service, welcomed the news.
"This group of customers who don't have broadband have lost out in recent years as the shift in competition in fixed telecoms has overlooked voice-only services in favour of broadband,” he said.
"For many of these customers the landline is seen as a lifeline, so this is a welcome move,” he added.
