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The dwindling number of BT residential customers who still do not buy a broadband connection are to receive a 37% cut in their line rental fees, in a voluntary agreement between BT and Ofcom that comes in the wake of the regulator’s market review.
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The move represents a saving of £84 per year – or £7 per month – for up to a million customers, mostly aged over 65.
The review found that compared to those who buy bundled services including broadband and pay TV, landline-only customers were receiving poor value for money. Ofcom also said that despite wholesale costs falling, they had still seen increases in telephone line rental prices.
“For many people, their landline is their lifeline,” said Ofcom competition group director Jonathan Oxley. “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.”
The discount will be applied automatically to the bills of 800,000 customers from April 2018. A further 200,000 customers who take BT’s “Home Phone Saver” package will also be eligible to move to the discounted product if they wish. Customers will be protected from further real-time price increases, with both line rental and call costs capped at the rate of inflation for three years. BT has also undertaken not to raise any of its prices before 1 April 2018.
“We welcome a balanced voluntary agreement with Ofcom, which means that up to one million of our customers who don’t have broadband will receive a substantial cut in the price of their line rental from April 2018,” said a BT spokesperson.
“We have listened to the concerns of our line-only customers and agreed to reduce the price of line rental for them by £7 a month – or £84 a year – which means they will only pay £11.99 a month for standard line rental.”
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Hannah Maundrell, editor-in-chief at consumer service comparison site Money.co.uk, said: “It’s about time something was done about the sky-high cost of landlines for those without a broadband connection. Many people don’t actually use their landline for anything but broadband now as they use mobiles for calls instead. However, for people who only have a BT landline, it is a lifeline – especially for the elderly – this will make a huge difference.”
“Whilst the cost of landlines have consistently increased in recent years, most of the benefits seem have gone to broadband customers – so why the extra costs? This move will protect some of the most vulnerable customers from paying through the nose,” she said.
Stick and carrot
Ofcom said it hoped its agreement with BT would also spur other telecoms services providers to improve their customer service quality; a third of the UK’s 1.5 million landline-only customers take a service from a different provider, and they also tend to get less value for money than those buying bundled services.
The regulator claimed its market analysis showed that every single landline provider in the country had increased their line rental charges by between 23% and 47% in real terms over the past few years, while wholesale costs have dropped by 27%.
Such consumers are also being squeezed in terms of choice, with a number of providers having completely withdrawn landline-only products.
Additionally, said Ofcom, BT’s dominant position had enabled it to increase prices without risking its customers – 77% of its landline-only customers have never switched providers – and so its competitors have tended to follow this lead. It said it expected the price cut to incentivise other providers to do the same.