Millions of BT customers to see monthly bills drop by £5
Ofcom found landline-only customers, who are often elderly or vulnerable people and who have remained with the same landline provider for decades, are getting poor value for money.
These customers buy landline-only service either because they do not want broadband or pay TV, or because they take these services under separate contracts from different companies.
Major providers have increased their line rental charges significantly in recent years – by between 25% and 49% in real terms, Ofcom said.
This is despite a 26% fall in the underlying wholesale cost of providing a landline service.
What are Ofcom’s plans?
Ofcom intends to give customers with standalone landline contracts additional protection by cutting the cost of BT’s line rental by at least £5 per month – or £60 per year.
This would mean BT customers with only a landline, who currently pay £18.99 per month for line rental, would pay no more than £13.99 – a reduction of at least 26%.
The planned price cut would not apply to customers buying bundle services including broadband.
The cut would return the cost of line rental to 2009 levels in real terms, effectively reversing price hikes for landline-only customers.
The regulator is also proposing safeguards to prevent BT from making future increases to line rental and landline call costs by more than inflation.
Sharon White, Ofcom chief executive, said: “Line rental has been going up, even as providers’ costs come down. This hurts people who rely on their landline the most, and are less likely to shop around for a better deal. We think that’s unacceptable.
“So we plan to cut BT’s charge for customers who take only a landline, to ensure that vulnerable customers get the value they deserve.”
According to Ofcom, almost 80% of the UK’s 2.9 million landline-only customers are with BT. Ofcom said BT’s market power has allowed it to increase prices “without much risk of losing customers”. Other providers have then followed BT’s pricing lead.
Ofcom said it expects other providers to reduce prices on the back of BT’s price cuts.
In a statement, BT said: “We will respond to Ofcom’s consultation fully when we have considered the detail. We take our responsibilities in this area very seriously and, unlike other companies, have many customers on special tariffs for socially excluded or vulnerable customers, including BT Basic, which still costs just £5.10 a month for line rental and calls, and Home Phone Saver.”