Watchdog Ofcom will force BT to cut phone bills of 2m customers by at least £5 per month, saying competition has failed a "vulnerable" group of elderly customers.
These are customers who are signed up to phoneline-only services from the telecoms giant. The cut would reduce their bills by £60 per year, or about 25pc.
Sharon White, Ofcom's chief executive, said its research showed a high proportion of these people were in their late 70s. "Many are elderly and vulnerable," she said.
"They take just a landline, but for them it's a lifeline," she said.
"Many have been loyal customers for many decades," she added, pointing out that this group were less likely than others to shop around and switch provider.
They typically pay £19 per month for their phone-only service, whereas other consumers were obtaining phone and broadband services bundled together for a similar monthly price or only marginally more, Ofcom pointed out.
Ms White said this group of customers had seen their bills rise by around 30pc in recent years while the costs to BT and other operators of providing the service had fallen by 25pc (see graph).
The £60-a-year cut would push bills back down to their 2009 level.
"BT is dominant in this market for landline-only services and we believe it needs to act," she said.
BT said it would "respond to Ofcom’s consultation fully when we have considered the detail".
It pointed to its "basic" calls-only package which costs just over £5 per month.
It said it had frozen line rental and been improving services such as its free nuisance calls prevention service.