More than 2m customers who buy only a landline service from BT will see their bills fall after a review by the telecoms regulator.
Ofcom said on Tuesday that those who just buy a landline from the UK’s dominant provider — either because they do not want broadband or pay TV, or because they take these services under contracts from different companies — will have their bills reduced by at least £5 a month.
The regulator, which launched its review into pricing in December, said landline rental prices had shot up in recent years despite the actual cost of providing a landline-only service getting cheaper.
“This hurts people who rely on their landline the most, and are less likely to shop around for a better deal. We think that’s unacceptable,” said Sharon White, chief executive of Ofcom.
BT is not the only fixed-line provider in the UK but it is the dominant player. The group has 2.3m of the UK’s 2.9m landline-only customers, an 80 per cent market share. The watchdog expects that the move will force other landline providers, such as Virgin Media and Sky, to follow suit and lower their own pricing.
BT said it would respond to Ofcom’s proposal fully “when we have considered the detail”, but added it already had in place lower tariffs for some low-income customers meaning they paid less than the standard line rental charge of £18.99 a month.
“We take our responsibilities in this area very seriously”, it said, citing its BT Basic plan, a package aimed at those claiming benefits which costs £5.10 a month for line rental and calls.
Ofcom said BT Basic customers won’t be affected by the proposals. The price cut will also not apply to landline services sold by BT as part of a bundle of services including broadband.
However, it did hint at a further £2 reduction to bills, taking the total cut to £7, with a final decision expected in May. The watchdog also plans to make BT make more effort to let landline-only customers understand how other BT packages or providers might offer cheaper deals.
Gillian Guy, chief executive of Citizens Advice, said: “The plan Ofcom has announced today to help reduce the bills of elderly and vulnerable people is a really positive move.”
Shares in BT fell 1.3 per cent after the news to 326.5p.
Analysts at Exane BNP Paribas said: “These proposals are a clear negative for BT.”
It is the second time this month the telecoms group has been in the regulator’s crosshairs. BT is planning to restructure its Openreach division, which owns the fibres and wires that provide homes and businesses with broadband, after Ofcom’s recommendation that it become a legally separate company, but Ofcom has said these proposals do not go far enough.