Ofcom has slammed telecom providers for offering landline-only customers poor value for money, as it unveiled plans to force BT, the dominant provider, to cut bills by at least £5 a month, benefiting about 2.3 million people.
The regulator 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 other companies provide these services.
Ofcom said the customers, who tend to be elderly people who have been with BT for decades, were getting “poor value for money”.
The watchdog aims to force BT to cut its standalone line rental by £5 to £7 a month which means customers with only a landline, who currently pay £18.99 a month, would pay no more than £13.99 – a reduction of at least 26%. The price cut would not apply to landline services sold by BT as part of a bundle of services including broadband.
BT accounts for nearly 80% of the landline-only market of 2.9 million people. At the start of the review in December, Ofcom said BT and Virgin Media had the highest line-rental charges, followed by TalkTalk and Sky. At the time, Virgin Media launched a “Talk Protected” plan which freezes line rental for elderly and disabled customers at £17.99.
Ofcom expects other providers who benchmark prices against BT to follow suit and cut landline rental charges. The regulator’s investigation closes in May. It will announce a final decision towards the end of the year.
Consumer groups and the Labour party welcomed Ofcom’s move. Tom Watson, shadow secretary of state for culture, media and sport, said: “This landline rip-off can’t go on any longer. It’s a scandal that service providers have increased landline prices year on year despite benefiting from significant decreases in wholesale costs.
“Landlines are important to households across the country, and the elderly and vulnerable in particular. We need to see a fairer deal for consumers and the government must act to put safeguards in place to prevent future increases above inflation.”
Citizens Advice called for similar action in other markets such as energy. Its chief executive, Gillian Guy, said: “Loyal customers often pay much more for their essential bills. People who stay with the same phone, broadband, gas and electricity supplier are getting a raw deal – as firms know they are less likely to shop around to get a better price.”
