The move - which will reduce standard line rental to £11.99 a month, will mainly affect elderly and vulnerable customers who have home phone only deals. Landline-only customers have previously not received the same value for money as those who buy bundles of landline, broadband and/or pay-TV services. Two thirds of landline-only purchasers are over 65, and three quarters have never switched provider.
Of the UK’s 1.5 million landline-only customers, two thirds are with BT. Ofcom said that this position had allowed BT to increase prices without much risk of losing customers.
The discount will automatically apply to 700,000 BT customers, while a further 190,000 who have chosen to receive paperless bills will be contacted by BT to be asked to confirm that they do not get broadband from any provider. If they are eligible, they will also receive the discounted rate.
Jonathan Oxley, Ofcom’s competition group director, said he hoped other providers would follow suit. Post Office, which serves the second largest share of the landline-only market after BT, is to offer a new price of £11.50 from May.
He 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.”
Consumer groups welcomed the move, which came after Ofcom investigated rising prices in the sector last year. It found that all major landline providers had increased their line rental charges significantly in recent years – by between 23 per cent and 47 per cent in real terms. This is despite them benefitting from a 27 per cent fall in the underlying wholesale cost of providing the service.
Richard Neudegg, head of regulation at uSwitch.com, said: “BT volunteered to implement the cut for these customers without broadband at a rate sitting at the upper end of Ofcom’s proposal, which is laudable given landline-only services are typically taken by more vulnerable - particularly elderly - customers.
“In recent years, this group of customers - who don’t have broadband - have lost out as the shift in competition in fixed telecoms has overlooked voice-only services in favour of broadband.”
Alex Neill, managing director of home products and services at Which?, said: “Ofcom should continue to do more to boost transparency and fairness in the telecoms markets, encouraging customers to switch and ensure they can access the right deal for them.”
A spokesman for BT said: “We welcome the fact that up to 900,000 of our customers who don’t have broadband will receive a substantial reduction in the price of their line rental from 1 April 2018.”
New customers and any customers who switch to BT solely for a phone line will also be charged the lower price.