BT to slash landline costs by 37% for up to one million customers

Telecoms giant BT has announced it will cut the cost of its landline-only contracts by 37%, following a review from the industry regulator Ofcom.

The FTSE 100-listed company said on Thursday (26 October) that, from April next year, up to one million landline-only customers will see the price of their contracts decline by £7 from the current £18.99.

Households affected by the reduction will save £84 a year and will be protected from further price increases as rental costs are capped at the rate of inflation.

The decision comes after Ofcom launched a review of competition within the telephone industry, which found landline-only customers were getting poor value for money, compared to those who purchase landlines in a bundle with broadband or pay TV access.

That became a major concern, as nearly two-thirds of BT landline-only customers are over 65 and have never switched to a cheaper provider.

Under the BT Basic brand, the company already offers packages aimed at low income users but added it had reached "a balanced voluntary" agreement with Ofcom.

"We welcome a balanced voluntary agreement with Ofcom which means that up to 1m of our customers who don't have broadband will receive a substantial cut in the price of their line rental from April 2018," the company said in a statement.

"We have listened to the concerns of our line-only customers and agreed to reduce the price of line rental for them by £7 a month, which means they will only pay £11.99 a month for standard line rental."

BT owns approximately 80% of Britain's landline market and the regulator added it hoped the ruling would encourage more providers to cut prices.

The move was welcomed by consumer groups, which praised the company for reaching a voluntary agreement with the watchdog.

"BT's voluntary agreement to cut bills for these customers at the upper end of Ofcom's proposal is especially laudable in light of the fact landline-only services are usually taken by more vulnerable customers," said Richard Neudegg, head of regulation at uSwitch.com.

"This group of customers who don't have broadband have lost out in recent years as the shift in competition in fixed telecoms has overlooked voice-only services in favour of broadband. For many of these customers the landline is seen as a lifeline, so this is a welcome move."

Alex Neill, Which? Managing Director of Home Products and Services, added: "Ofcom should continue to do more to boost transparency and fairness in the telecoms markets, ensuring that all customers can access the right deal for them."