British telecoms regulator Ofcom has announced a review of the retail market for standalone landline telephone services. While the watchdog has said it believes that overall competition remains strong, it has raised concerns that those customers who buy a standalone landline ‘are not being served well by the market’.
According to Ofcom’s analysis, the UK’s major landline providers have increased line rental charges significantly in recent years – by between 28% and 41% in real terms – despite benefiting from a decline of around 25% in the underlying wholesale cost of providing a landline service. Moreover, the regulator noted that elderly and vulnerable people, who make up a significant proportion of landline-only customers, are particularly affected by these price rises. Ofcom’s review will establish whether measures are needed to protect this group, and it has said it is now analysing the market in detail and, depending on its findings, could publish a consultation soon.
Under its proposals, Ofcom intends to give customers with standalone landline contracts additional protection by cutting the cost of incumbent BT’s line rental by at least GBP5 (USD6.2) per month – or GBP60 per year. This planned price cut would not apply to landline services sold by BT Consumer as part of a bundle of services including broadband, though it would mean that BT customers with only a fixed line would see their monthly charge fall by at least 26%, from GBP18.99 to no more than GBP13.99. Such a cut, it claimed, would return the cost of line rental to 2009 levels in real terms, effectively reversing price hikes for landline-only customers. In addition, Ofcom has is also proposing safeguards to prevent BT from making future increases to line rental and landline call costs by more than inflation.