BT landline only customers to get £7 windfall in April 2018
There are some 1.5 million landlines in the UK where people do not have broadband too and Ofcom has got BT to agree to reduce the price of its standalone landline service to from £18.99 per month to £11.99 which returns the cost to around what people paid in 2009.
This reduction will benefit around 1 million customers, and Ofcom is apparently expecting the other operators to follow suit for its standalone customers, i.e. the pressure to retain those half million customers will see them reducing their retail price. As far as we can tell there is no reduction in the wholesale pricing, so once competitors to BT have done their maths it may be they will lower the pricing for existing customers but stop chasing new landline only customers, with the effect that BT may become the defacto provider for landline only services over time.
We had wondered what would happen to those people who have BT line rental but broadband via another provider and the Ofcom news is pretty clear today that the price cut does not apply to you. What will happen though is that BT is meant to help those customers take advantage of bundles to lower their overall price paid out for fixed line broadband and phone. While moving to a bundle is cheaper for some there are combinations particularly for home workers where you cannot get the same services in a bundle currently. Our guess then is that the result is that those paying BT line rental and have broadband with another operator will get more promotional material for BT bundles, we cannot envisage BT Consumer agreeing to the promote bundles from other operators.
To avoid this reduction in line rental being clawed back in a couple of years a price cap is to be put in place, with the increase limited to the rate of inflation.
Two thirds of the those affected are in the over 65 age bracket and three quarters have never switched providers and with many more services moving to online by default the price jump from a simple line rental service to a broadband with fixed line package will now seem a larger gap to bridge in terms of the price people will be required to pay. Therefore there is a possibility that the move today will cement this ratio for those not taking broadband until in many years a generation who has only known the internet since their teenage years are the retired generation.