Ofcom has announced plans to force BT to cuts its landline service for over 2 million customers by at least £5.
The British regulator reviewed the market for customers who only purchase a landline service and found that rapidly rising prices for services were not reflective of the falling wholesale costs in the telecoms industry.
Ofcom also found that customers who opt out of Broadband and PayTV services typically come from more vulnerable demographics; 43% were aged 75+, 35% were lower income households, and 70% had never switched provider before. These groups are also less likely to shop around the market for better deals.
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.”
Ofcom found that whilst major providers have increased rental charges between 25% and 49%, wholesale costs of providing landline services have actually decreased by 25%. To combat the regulator has suggested that customers be given a price cut of £5 per month or £60 per year for the landline service only, decreasing the £18.99 service to £13.99 per month.
Roughly 2 million people in the UK retain a landline only connection, 80% of which are BT customers. Ofcom believes that BT’s market share allowed it to unfairly increase prices with little risk of losing customers.
This news comes after a slew of bad news for BT over the last few months, which has seen it’s Italian division devalued by £530 million, and two price hikes since summer 2016 which saw the company criticised by British MP’s.
The Ofcom review is expected to be completed by May 9th of 2017.
