BT faces real competition in telephone market

NEWS Oftel has torn open the door to the domestic telephone market, offering BT's rivals a chance to compete on a level playing field. Competitors can currently offer calls to BT subscribers by dialling a four digit code or using a special filter, but the customer still has to rent a line from BT - so they end up receiving two separate bills. Under the new proposals, a rival telecoms company will be able to send its customers a single bill for both line rental and calls. They will be able to rent the lines from BT's Wholesale division at the same price as BT's consumer division rents its lines. Oftel hopes the ruling will result in a proliferation of new packages for domestic telephony, such as flat-rate unlimited call packages, or call offers with no line rental charge. Centrica, formerly British Gas, which already offers telephone services, has said it will take advantage of the new Oftel ruling. The new wholesale products are to be made available as soon as is practical after 1 September, an Oftel spokeswoman said. Oftel also changed BT's price control regime. Instead of being forced to cut average annual bills for the lowest-spending 80 per cent of BT's consumers by a few per cent, BT will be allowed to freeze them at current levels - until competition from the wholesale product starts to "bite". When Oftel decides that BT is facing significant wholesale competition, it will be allowed to start raising prices in line with inflation again. Oftel has also extended BT's duty to provide low-cost telephony services to its lowest spending consumers as a social service. The Light User Scheme, which currently entitles the lowest spending 20 per cent of customers to a reduction in their line rental, will be extended to the lowest spending 30 per cent.