BT Cuts Landline-Only Costs
BT landline-only customers will see their bill prices cut by 37%, from April 2018.
Announced by BT on October 26th, up to a million households will see their landline-only bills reduced by £84 per year — that’s £7 per month.
Landline-only customers who now pay £18.99 per month will soon only pay £11.99.
Given that BT has over two thirds of the UK’s landline-only customers, this is a big deal.
Why have BT landline-only costs been cut?
Why this sudden cut in the cost of landline-only charges at BT?
BT landline-only customers have been given “poor value for money” and “seen their phone bills soar”, according to Ofcom.
They believe BT has been overcharging landline-only users, most of whom are elderly and don’t have broadband or TV packages.
Ofcom have made it clear to BT that those customers should get a better deal, and have intervened to ensure this happens.
Why has BT been raising its landline-only prices?
As Ofcom have explained, BT’s position of dominance has allowed it “to increase prices without much risk of losing customers, and other providers have followed BT’s pricing lead.”
Even though BT have listened to Ofcom and cut their prices, Ofcom have stated they will continue to keep a close eye on the market to ensure BT’s actions address the problems they have identified.
They “will consider the need for further intervention” if they have any concerns about consumers or competition.
Benefits of cutting BT landline-only costs
The benefits for BT landline-only customers are obvious.
As personal finances are already being squeezed, especially for the elderly and vulnerable, the saving of £84 per year is something worth getting excited about.
Most BT customers will see any reduction as a plus. However, a reduction of 37% is quite unprecedented.
It’s not only BT customers who can benefit. Customers on other landline-only providers can also profit from the intervention.
As expressed by Ofcom, we can “expect BT’s £7 price cut to mean other providers can follow suit.”
Reaction to cutting BT landline-only costs
While BT has said that it welcomed the "balanced voluntary agreement with Ofcom", some have criticised BT for needing intervention in the first place.
Caroline Abrahams, charity director at Age UK, welcomed the reduced tariffs but found it “disappointing” that it took intervention from Ofcom for it to happen.
Matt Hancock, Minister of State for Digital, however, welcomed the news: "BT’s price cut for landline customers today shows the real effect of action we are taking to make markets work better for people. I’m delighted at the action Ofcom have taken - doing exactly what a good regulator should."
While Ofcom hoped that such a move would make other landline-only providers “follow suit”, the response, so far, hasn’t been what they expected.
Virgin Media, Sky and the Post Office have yet to comment on whether they will reduce their charges.
But it hasn’t all been radio silence.
Virgin Media have stated that they have already frozen charges for elderly and disabled customers at £17.99 a month, with the Post Office saying it will look again at the issue.
Whether they do indeed follow suit is something we will find out in the future.
With one of the UK’s biggest landline-only providers cutting its prices, customers from all other providers can only hope they follow the same path.
While BT cutting its landline-only prices is a good thing, the fact that it took intervention from Ofcom undermines their good intentions.
Despite the wholesale cost of providing the service having fallen by 27% in real terms, landline-only providers are still increasing their charges. Both Sky and Virgin Media have increased theirs by 47% above the rate of inflation since 2009.
These charges have been falling on the most vulnerable and elderly in society who don’t have broadband and only have a landline number. Providers will, hopefully, take this on board when they review their costs and consider cutting their prices for the benefit of their landline-only customers.