Millions of UK customers using only landline telephone services from BT could see their monthly bills slashed by over a quarter under new proposals from Ofcom.
Over two million people with standalone landline contracts with BT could have their bills cut by between £5 and £7 a month.
If the cut is set at £5, customers currently paying £18.99 per month for line rental would pay no more than £13.99 – a cut of around 26 percent – and restoring charges to 2009 levels.
The cut will not apply to landline services sold by BT Consumer as part of a bundle of services including broadband.
Almost 80 percent of the UK’s 2.9 million landline-only customers, 2.3 million, are with BT.
The price cut proposals follow an Ofcom review into how the market is working for customers, often aged 75 or older or vulnerable people from low income households, who only use landline because they don’t want broadband or pay TV or because they take these services under separate contracts from different companies.
Ofcom said these customers, who have remained with the same landline provider for decades, were getting poor value for money and are particularly affected by price hikes in telephone line rental.
Ofcom said that major providers had increased their line rental charges by between 25 percent and 49 percent in real terms in recent years, despite benefiting from around a 26 percent fall in underlying wholesale costs.
It also proposed safeguards to prevent BT from making future increases to line rental and landline call costs by more than inflation.
The regulator also intends to require BT to trial different approaches for communicating with its landline-only customers.
This is to help them better understand what they are paying, and how other BT packages, or even other providers, might offer better value for money.
Ofcom will now consult the industry on its proposals with the review set to close on 9 May.
Sharon White, Ofcom Chief Executive, said: “Line rental has been going up, even as providers’ costs come down.
“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. So, we plan to cut BT’s charge for customers who take only a landline, to ensure that vulnerable customers get the value they deserve.”
Ofcom added that BT had used its “market power” to increase prices without much risk of losing customers.
Other providers had then followed its pricing lead.
“We expect that our proposed cut in BT’s prices would lead to other providers following suit and reducing theirs. This would mean savings for landline-only customers across the market,” Ofcom said.