BT customers who only pay for a landline telephone service will see their monthly bills slashed by £7 per month from April 2018, following a review by telecoms industry regulator Ofcom.
Around 800,000 of the affected customers won’t have to do anything to claim the price cut. The 37% saving will be applied to their bills automatically. New Ofcom rulings mean they will then be protected from ‘real-term’ price increases, with line rental and call costs capped at the rate of inflation.
A further 200,000 customers on BT’s Home Phone Saver package will also be eligible for savings. These customers will be able to choose to stay on their current package, or move to the standard landline-only deal that is being cut, depending on which works out as best value for them.
Related: see how BT compares to the competition in our guide to the best and worst broadband providers.
Line rental price increases
All of the major landline providers have increased their line rental charges significantly in recent years – by between 23% and 47% in real terms. This is despite providers benefiting from around a 27% fall in the wholesale cost of providing the service.
Compared to customers who pay for a bundle of landline, broadband and/or pay-TV services, landline-only customers get poor value for money. There is less choice for landline-only customers, with a number of providers having withdrawn their landline-only offerings altogether.
Nearly two-thirds (66%) of customers with only a landline are over 65, and more than three-quarters (77%) have never switched provider.
Ofcom’s Competition Group Director Jonathan Oxley said: ‘For many people, their landline is their lifeline. 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. So I’m pleased BT has responded to our plans in full by cutting these customers’ bills.’
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Poor value BT deals
Of the UK’s 1.5 million landline-only customers, two thirds are with BT. This position has allowed BT to increase prices without much risk of losing customers, and other providers have followed BT’s pricing lead. Ofcom hopes BT’s £7 price cut will prompt other providers to follow suit.
The regulator also wants to help people who buy a telephone service from one provider and broadband from another. While the price cut will not apply to this group, an agreement between BT and Ofcom requires the telecoms giant 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 purchased services as part of 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.
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