BT customers who have only a landline – without any broadband – will see their monthly phone bill cut by £7 from Sunday, following an intervention by Ofcom.
Ofcom investigated rising prices for landline-only services last year. In October, we announced that BT had agreed to reduce monthly bills for these customers.
From Sunday 1 April, their monthly line rental will fall by 37% – from £18.99 to £11.99. The change will save these customers, many of whom are elderly, £84 a year. As part of the agreement, BT will also cap line rental and call charges, to increase by no more than inflation, for three years.
Landline-only customers have not received the same value for money as those who buy bundles of landline, broadband and/or pay-TV services. Two thirds (66%) of landline-only purchasers are over 65, and three quarters (77%) have never switched provider.
Ofcom’s analysis showed that all major landline providers had increased their line rental charges significantly in recent years – by between 23% and 47% in real terms. This is despite them benefitting from a 27% fall in the underlying wholesale cost of providing the service.
Of the UK’s 1.5 million landline-only customers, two thirds are with BT. This position had allowed BT to increase prices without much risk of losing customers, and other providers followed BT’s lead.
Post Office, which serves the second largest share of the landline-only market after BT, recently confirmed to Ofcom that it will be offering a new price of £11.50 from May. We now want to see other providers follow suit.
Jonathan Oxley, Ofcom’s Competition Group Director, said: “We had serious concerns about soaring bills for loyal landline customers. This was hurting people who rely on their landline, many of whom are elderly.
“We’re pleased that BT has cut prices, which means these customers get a fairer deal, and they’ll be protected from price rises in the coming years.”
This week, BT has written to nearly 900,000 of its customers who buy only a landline service from the company.
More than 700,000 of these customers don’t have to do anything to benefit from this price cut: it will appear on their next bill automatically.
The discount is intended to apply to BT landline customers who don’t buy broadband from any provider. So BT has also written to 190,000 of its landline customers who have chosen to receive paperless bills, asking them to confirm that they don’t have broadband. Customers who confirm this will be eligible for the price cut.1
A further 200,000 customers on BT’s ‘Home Phone Saver’ package could also qualify. They can choose to stay on their current package, or move to the standard product being discounted, depending on which is the best deal for them.2
Ofcom also wants to help people who buy their telephone service and broadband separately. Now is a good time for these customers to consider whether they could save money by purchasing their landline and broadband services as part of a bundle.3
The agreement requires BT to help these customers take advantage of the deals on offer in the market, by explaining that they could get a better deal if they buy as a bundle.
Separately, Ofcom is examining measures to help people shop around with more confidence, so they can take full advantage of the wide choice of competitive services. We will publish more details soon.
Addressing landline prices is one of a series of measures by Ofcom to help telecoms customers. We are also ensuring that people receive automatic compensation when things go wrong; get better information on broadband speeds before entering a contract; and can switch mobile provider easily.