LONDON, Oct 26 (Reuters) - Britain's BT has agreed to cut the amount it charges customers who only take a landline service by 37 percent following pressure from the regulator which is seeking to protect elderly and vulnerable people.
Ofcom had raised concerns about the price the country's dominant telecoms provider charged landline-only customers after deciding that part of the market was not functioning properly.
BT said that as a result of its agreement with Ofcom, up to 1 million of its customers would see their monthly bill fall from April 2018.
Line rental will drop to 11.99 pounds from 18.99 pounds a month, lowering the annual cost by 84 pounds a year.
Future line rental and call costs will be capped at the rate of inflation.
Ofcom believes that those customers most likely to take just a landline are the elderly or vulnerable who rely on the service and who are unlikely to shop around for a better deal.
"Of the UK's 1.5 million landline-only customers, two thirds are with BT," Ofcom said in a statement. "This position has allowed BT to increase prices without much risk of losing customers, and other providers have followed BT's pricing lead.
"We expect BT's 7 pound price cut to mean other providers can follow suit."
Ofcom said it would keep a close eye on the market in future to examine whether it was working properly.
Reporting by Kate Holton, Editing by Paul Sandle