Ofcom has today set out plans to cut monthly phone bills by at least £5 a month for more than two million people who buy only a landline phone service from BT.
We have reviewed how the market is working for customers who buy only a landline phone service, either because they do not want broadband or pay TV, or because they buy these services in separate contracts.
We have found that these customers – often elderly or vulnerable people who have remained with the same phone company for decades – are getting poor value for money in a market that is not serving them well enough:
- 70% of landline-only customers have never switched, or considered doing so;
- On average landline only customers have been with their phone company more than 20 years;
- 43% of those with a standalone landline contract are 75 or over;
- 35% live in DE households on the socio economic scale.
Landline-only customers are particularly affected by price hikes in telephone line rental. The big phone companies have increased their line rental charges significantly in recent years – by between 25% and 49% in real terms. This is despite benefiting from a 26% fall in the cost to them of providing the service.
Ofcom intends to give customers with standalone landline contracts additional protection by cutting the cost of BT’s line rental by at least £5 per month. This would mean that BT customers with only a landline, who currently pay £18.99 per month for line rental, would pay no more than £13.99 – a reduction of at least 26%. The cut would return the cost of line rental to 2009 levels in real terms, effectively reversing price hikes for landline-only customers.
We expect that our proposed cut in BT’s prices would lead to other companies following suit and reducing theirs. This would mean savings for landline-only customers across the market.
We are also proposing safeguards to prevent BT from making future increases to line rental and landline call costs by more than inflation.
The consultation is open until 9 May. https://www.ofcom.org.uk/consultations-and-statements/category-1/review-of-landline-telephone-services