BT to slash line rental for landline-only users
BT has agreed to Ofcom’s demands to cut the cost of its landline-only service. Here’s what you need to know.
Up to one million BT landline-only customers will see their bills slashed by £7 a month from April 2018, following a review of the market by Ofcom.
The regulator found that landline-only customers – who tend to be older and less likely to switch – were getting a poor deal compared to those that buy broadband or TV bundles.
It was also concerned that line rental costs had soared since 2009 despite wholesale costs falling 27%.
Ofcom ordered BT – which has the largest share of the landline-only market – to drop prices by between £5 and £7 a month following its review earlier this year. Now it’s hoped BT’s decision to apply a £7 cut will encourage other providers to follow suit.
Who will benefit?
BT’s landline-only customers currently pay £18.99 a month, but from April 2018 this will fall by £7 to £11.99 a month – a 37% drop.
800,000 landline-only customers will have the saving –which amounts to £84 a year – automatically applied to their bill.
A further 200,000 customers on BT’s Home Phone Saver (a line rental and calls package with some additional features) will also be eligible.
However, these customers will need to choose if they want to move onto the standard landline-only tariff being cut or stick with their current deal, which might be cheaper.
The April 2018 price cut only applies to those with a landline-only deal who don’t get broadband from either BT or another provider. Those with a line rental saver deal are also excluded.
Under the agreement, Ofcom says the price cut will apply for three years and the costs of line rental and calls will be capped to inflation.
‘A landline is a lifeline’
Nearly two thirds (66%) of landline-only customers are over 65 and more than 77% have never switched providers according to Ofcom’s research.
Jonathan Oxley, Ofcom’s Competition Group Director, commented: “For many people, their landline is their lifeline.
“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.”
Ofcom found that major landline providers had hiked the cost of line rental by between 23% and 47% in real terms since 2009 despite benefiting from a 27% fall in wholesale costs.
What BT says
A BT spokesperson commented: “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.
“This will come in to effect from April 2018 for all landline-only customers who just take phone services from us and don’t have broadband (either with BT or someone else).
“We already offer low-income customers on certain benefits a special tariff called ‘BT Basic’ and also offer Home Phone Saver that provides a great value bundle for customers who want a traditional phone service, with Anytime calls and other benefits.”
Will other providers follow suit?
There are 1.5 million landline-only customers in the UK and two-thirds are BT customers.
Ofcom says this market power has allowed BT to increase prices without the risk of losing customers and the few other providers in the market have followed BT’s lead.
However, the regulator expects BT’s £7 price cut will encourage rivals to follow suit and also lower their prices.
Switch today
If you’re a BT landline-only customer, don’t wait for the April changes, compare deals and switch today.
Head over to Broadbandchoices.com to see how much you could save.
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