The watchdog said that it had set out firm proposals to cut monthly bills for landline-only customers by between £5 and £7, which BT had accepted in full.
The 37 per cent reduction, which will see customers’s bills cut from £18.99 a month to £11.99, will return phone-only rates to a similar level to 2009.
Nearly two thirds of customers with only a landline are over 65, and more than three quarters have never switched provider.
Jonathan Oxley, Ofcom’s competition group director, 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.”
Consumer groups welcomed the move. Ofcom analysis shows that all major landline providers have increased their line rental charges significantly in recent years – by between 23 per cent and 47 per cent in real terms - despite providers benefitting from around a 27 per cent fall in the underlying wholesale cost of providing the service.
Alex Neill, Which? managing director of home products and services, said: “Today’s announcement will be welcome news to those BT landline-only customers who will now see a cut to their phone bills.
“Ofcom should continue to do more to boost transparency and fairness in the telecoms markets, ensuring that all customers can access the right deal for them.”
Richard Neudugg, head of regulation at uSwitch.com, said: “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.
“For many of these customers the landline is seen as a lifeline, so this is a welcome move.”
At least 800,000 of these landline-only customers do not have to do anything to claim the price cut – it will appear on their bills automatically. 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 may also be eligible. This group of customers can choose to stay on their current package, or move to the standard product being cut, depending on which is the best deal for them.