Ofcom has said in a statement that BT (LON:BT.A) will cut landline bills by £7 a month from April.
In a bid to protect pensioners, the UK watchdog said that landline customers, the majority of whom are pensioners, are not getting value for money.
The 37 percent decrease will save households £84 a year. Three more providers are expected to follow the change.
Jonathan Oxley, Ofcom’s competition group director said: “For many people, their landline is their lifeline,”
“But households who only have a landline – and no broadband – have seen their phone bills soar,”
“Many are elderly, and have been with BT for decades. We’ve been clear that they must get a better deal. So I’m pleased BT has responded to our plans in full by cutting these customers’ bills,” he added.
Almost two-thirds of BT landline customers are over 65 and have never changed provider.
The review into BT by Ofcom found that it has 1.5 million of the UK’s landline-only customers so was able to continue hiking prices without the risk of losing too many customers. When BT increased prices, other providers were likely to follow suit.
Ofcom is hoping competitors will now cut prices, following BT’s lead.
“This group of customers who don’t have broadband have lost out in recent years as the shift in competition in fixed telecoms has overlooked voice-only services in favour of broadband,” said Richard Neudegg, head of regulation at uSwitch.com.
“For many of these customers the landline is seen as a lifeline, so this is a welcome move,”
Responding to the changes, BT has said that it welcomes “a balanced voluntary agreement with Ofcom”. The provider said it has “listened to the concerns of our line-only customers”.
Earlier this year, BT announced plans to slash 4,000 jobs over the next two years.
“The cost savings will provide headroom to offset market and regulatory pressures, and support increased investment in delivering great customer experience and leading networks,” BT said.