Telecoms giant BT will cut costs for up to a million landline-only customers following a review by the regulator.
From April 2018, the firm will slash the price of customers' monthly bills by £7, or 37 per cent, if they only pay for a landline telephone service.
Ofcom said those customers had been receiving poor value for money in recent years compared to those who buy bundles of landline, broadband and pay-TV services.
Nearly two-thirds, or 66 per cent, of customers with only a landline are over 65, and more than three quarters, or 77 per cent, have never switched provider, the watchdog said.
The move followed a review of the market, after which Ofcom set out proposals for BT to cut monthly bills. The regulator will step in if BT fails to honour the agreement.
“For many people, their landline is their lifeline," said Jonathan Oxley, Ofcom’s competition group director.
“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.”
BT welcomed the "balanced voluntary agreement" with Ofcom.
“We have listened to the concerns of our line-only customers and agreed to reduce the price of line rental for them by £7 a month, or £84 a year, which means they will only pay £11.99 a month for standard line rental," a spokesperson said.
Alex Neill, managing director of home products and services at consumer group Which, said:
Ofcom should continue to do more to boost transparency and fairness in the telecoms markets, ensuring that all customers can access the right deal for them.
Ofcom's analysis found all major landline providers have increased thier line rental charges "significantly" in recent years – by between 23 per cent and 47 per cent in real term – despite around a 27 per cent fall in the underlying wholesale cost of providing the service.
And of the UK's 1.5m landline-only customers, the regulator found two-thirds were with BT.
Ofcom expects other providers to follow suit after BT.