BT is forced by watchdog to cut phone-only bills by £60 a year

AROUND two million households with a BT telephone landline and no internet service will have their bills cut by more than £60 a year after an intervention by the telecoms regulator Ofcom.

The watchdog is to force BT to reduce bills by at least £5 a month, or around 25 per cent, for three years, after it established that its market monopoly had led to competition failures.

Almost 80 per cent of the UK’s 2.9 million landline-only households are with BT Group, which has meant that it can raise prices without much risk of losing customers.

Ofcom said a high proportion of those customers were elderly and vulnerable. Such customers have been particularly hit by rises in line rental, with major providers raising the tariff by 25 to 49 per cent in recent years – despite a fall of around 26 per cent in their costs in providing landlines.

Under Ofcom’s plans, which are expected to come into force by Christmas this year, BT’s line-only rental prices will return to 2009 levels. And although customers with other firms will not see their bills reduced immediately, it is expected that BT price cuts will force its competitors to follow suit.

Sharon White, the chief executive of Ofcom, said: “Line rental has been going up, even as providers’ costs come down. This hurts those who rely on their landline the most and are less likely to shop around. 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.”

Richard Neudegg, the head of regulation at uSwitch.com, said: “These unique circumstances have resulted in an essential lack of competition. We’ve seen many fixed voice-only packages not really offer best value for money, with bundled or mobile services often representing cheaper ways to make calls.”

Gillian Guy, the chief executive of the Citizens Advice charity, said: “Loyal customers often pay much more for their essential bills. People who stay with the same phone, broadband, gas and electricity supplier get a raw deal because firms know they are less likely to shop around to get a better price.

“The plan that Ofcom has announced to help reduce the bills of elderly and vulnerable people is a really positive move. We’d like to see similar actions in other markets, starting with energy.”

A BT Group spokesman said: “We take our responsibilities in this area very seriously and, unlike other companies, have many customers on special tariffs for the socially excluded or vulnerable, including BT Basic, which costs just £5.10 a month for line rental and calls.”