Bills for line-only customers will fall from £18.99 to £11.99 per month after regulator attacked deal as ‘poor value for money
BT is to slash the amount it charges a million landline-only customers by more than a third, saving them £84 a year, after Ofcom criticised telecom providers for overcharging those – mostly the elderly – who do not have broadband or TV packages.
The company will slash the monthly cost of line rental for its landline-only customers by £7 a month to £11.99 from April next year, following a scathing review by the regulator, which highlighted the “poor value” for money subscribers get compared with those who buy bundles including TV and broadband.
Ofcom said it stepped in because bills for landline-only customers – nearly two-thirds of whom are over 65 – have “soared” in recent years despite BT and other landline providers benefiting from significant cuts in the cost of providing the service.
“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. Many are elderly, and have been with BT for decades. We’ve been clear that they must get a better deal.”
Ofcom has focused on BT because it accounts for two-thirds of the UK’s 1.5m landline-only customers, but it expects rivals who similarly overcharge their customers to follow suit.
“This position [of dominance] has allowed BT to increase prices without much risk of losing customers, and other providers have followed BT’s pricing lead,” said Ofcom. “We expect BT’s £7 price cut to mean other providers can follow suit.”
Ofcom said that over three-quarters of BT’s landline-only customers have never switched provider, which has left them a prime target for price rises.
The regulator said that all major landline providers have increased their line rental charges by between 23% and 47% in recent years, while their own costs for providing the service have fallen about 27%.
Ofcom said it is also looking at measures to help people shop around for better deals with more confidence.
“We will continue to keep a close eye on the market, to ensure BT’s actions address the problems we have identified,” said Ofcom. “If we have any concerns about consumers or competition, we will consider the need for further intervention.”
The price cut, which will automatically be appiled to the accounts of 800,000 BT customers, will apply for three years from April. A further 200,000 customers on BT’s “Home Phone Saver” package will also be eligible but will have to apply.
“We welcome a balanced voluntary agreement with Ofcom,” said BT. “We have listened to the concerns of our line-only customers.”