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Over two million people who buy only a landline telephone service from BT would see their monthly bills cut by at least £5 per month, under plans announced by UK comms regulator Ofcom.
Ofcom has reviewed how the market is working for customers who buy only a landline service from a provider – either because they do not want broadband or pay-TV, or because they take these services under separate contracts, usually from different companies.
Ofcom found that these customers – often elderly or vulnerable people who have remained with the same landline provider for decades – are getting poor value for money in a market that is not serving them well enough. Landline-only customers are particularly affected by price hikes in telephone line rental. Major providers have increased their line rental charges significantly in recent years – by between 25 per cent and 49 per cent in real terms. This is despite providers benefiting from around a 26 per cent fall in the underlying wholesale cost of providing a landline service.
So 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 – or £60 per year.
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 per cent. The cut would return the cost of line rental to 2009 levels in real terms, effectively reversing price hikes for landline-only customers.
Ofcom is also proposing safeguards to prevent BT from making future increases to line rental and landline call costs by more than inflation.
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.”