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Incumbent operator to reduce price for landline-only customers by £7 a month, returning rates to their 2010 level
Ofcom on Thursday published new rules that will bring about a significant drop in prices for up to 1 million BT fixed-line customers.
The U.K. regulator conducted a review of U.K. line rental prices and concluded that rates have risen despite falling wholesale costs. As a result, it has ordered BT to reduce prices for customers who have a fixed-line into their home but no broadband service by between £5 and £7 (€5.59-€7.83) per month.
BT said it agreed with Ofcom’s ruling and will cut the price of line rental for its landline-only customers by £7 per month, reducing the monthly price to £11.99.
"This 37% reduction will return BT’s line rental for these households to a similar level to 2010," Ofcom said, in a statement.
The new rates will take effect in April 2018 and will apply to customers who have no broadband service, be it with BT or any other provider.
Landline-only customers "have been getting poor value for money in recent years, compared to those who buy bundles of landline, broadband and/or pay-TV services," Ofcom said.
The regulator’s market analysis shows that all major fixed-line providers have increased line rental charges by 23%-47% in real terms in recent years, despite the fact they have benefitted from a decline of around 27% in the underlying wholesale cost of providing the service.
BT serves two thirds of the U.K.’s 1.5 million landline-only customers, but other providers have followed the incumbent’s lead on pricing, Ofcom said. It now expects alternative operators to follow suit with price cuts.
According to the regulator, almost 66% of BT’s landline-only customers are over 65 and 77% have never switched provider.
Around 800,000 landline-only customers will see the price cut appear automatically on their bill and will have line rental and call prices capped at the rate of inflation, Ofcom said. Another 200,000 have signed up to the telco’s Home Phone Saver package, and will be eligible to switch tariff should the new price cut prove a better deal for them.
