Oftel proposals aim to cut telephone bills

Oftel have announced a radical package of measures to boost competition and protect the interests of residential consumers.

The package announced today effectively aims to allow competition in a market sector which has previously been dominated by BT.

Oftel’s announcement is good news for customers all across the UK as there will be a new opportunity for companies to compete with BT services and prices and offer a complete residential telephony package to consumers.

At present, customers have to pay BT for the telephone line, no matter which company they pay for the actual calls.

The arrangements proposed by Oftel include a new wholesale line rental product that will enable competitors to offer a complete telephone service covering line rental and calls.

The regulator said the new arrangement could lead to a range of innovative tariffs such as flat rate subscriptions for unlimited calls or the abolition of line rental charges.

David Edmonds, Director General of Telecommunications said: “Although price controls have delivered significantly lower prices for consumers, competition is increasing in the domestic calls market and the time is right for a new approach.

“Competition in calls is increasing. Consumers are using a number of different alternatives to BT, and its market share of calls has fallen from 82% to 61% in the last five years.

“Price controls can now be reduced and I have decided to boost competition by giving companies a new opportunity to use BT’s network to provide telephony services to consumers.

“These measures represent a significant move away from traditional price controls and will lead to their total abolition once the market is effectively competitive.”

Mr Edmonds said they would maintain a safeguard price control on BT while competition increased, and would only be relaxed when the new access product has been introduced and is being taken up in significant numbers by other operators.

He added: “Oftel will review the market again in 2004 and the price control will be withdrawn completely if the market is truly competitive.”

(AMcE)