Richard Thomson looks at how the phone bills add up using BT, Mercury and the cable companies
You have probably already been bombarded by leaflets from your local cable company tempting you to try, among other delights, its ultra- cheap telephone service. You probably looked at the columns of figures, the discounts, off-peak charges, bonuses and special offers and your head swam.

The explanations were as clear as mud. You tried to compare the charges to your current phone company, probably British Telecom with its own array of discounts and charges. After three minutes you gave up and threw the leaflet away.

It is partly for this reason that 95 per cent of us still cling to BT. The sheer complexity of phone charges makes it difficult to work out what advantage, if any, there might be in switching to a rival company.

For most private phone users, Mercury is generally cheaper than BT, but the cable companies are usually cheaper than Mercury. Taking this as a working hypothesis, you then need to look at a couple of your most recent phone bills to see how you use your phone.

Do you use it mostly for local calls, a few national ones but no international? Are you constantly phoning John O'Groats from Land's End, or calling Aunty Ethel in Sydney? Do you for some reason usually phone in the mornings or only in the evenings?

You may be surprised. You may think you make a lot of local calls, but that is probably not what you spend most money on. The Consumers Association, in an excellent survey of phone charges, calculated that in the average phone bill, local calls constituted only a third of the value. National calls accounted for around a half, while international calls were rarely more than about 10 per cent.

Once you have determined what kind of phone user you are, you're in a better position to sort out which phone company would be cheaper for you.

To understand BT's charging structure you have to remember that in recent years it has worked hardest to attract high-value business customers. Its rates are therefore most competitive on daytime and international calls.

Since it started to charge by the second rather than the unit, BT's rates are more competitive but they are still, in general, high. This is partly because of the whacking pounds 24.79 per quarter line rental.

Even BT's cut-rate service, Premier Line, requires a pounds 25 annual charge on top of the other BT standing charges to join. It offers a 15 per cent saving on local, national and international calls but because of the annual charge you would have to spend more than pounds 65 per quarter, excluding the line rental, before you began making any savings.

So how do BT and the other phone operators stack up against each other on local, national and international calls?

On local calls, Mercury is not in the race and nor does it want to be. If you turn to cable companies, however, you will almost always save money compared with BT's non-discounted rates. In most cases they are cheaper even than Premier Line. If you use their cheap rates (check the times carefully because they do not necessarily operate between the same hours as BT's) you can save even more. And some cable companies even offer free calls between their customers in particular areas.

Anyone lucky enough to live in a cable area covered by Nynex, by far the best value of the cable companies, will find call charges some 25 per cent below those of BT. As well as having low standing and connection charges, Nynex actually deducts 17.5 per cent from your call bill before adding VAT.

But not all cable operators are that good and there are big differences between their charges. With some, such as Yorkshire Cable, the local call costs may be virtually the same as BT's.

On national calls, the story is much the same. Some of the more expensive cable companies such as Birmingham Cable, may even charge more than BT's Premier Line, but most are slightly or substantially cheaper. Companies such as Bell Cable Media, Cambridge Cable and Nynex can be up to 35 per cent cheaper than BT.

It is on national calls that Mercury also starts to come into its own. You have to do quite a lot of long distance calling before you start to make big savings but it is worth serious consideration for many people whose calls are predominantly outside their local area.

With international calls the story is not so simple. BT is relatively competitive here, particularly with busy destinations such as the US and Germany. Mercury's discounted rates are almost identical to BT's Premier Line for many destinations. Some cable companies are more expensive than Premier Line for certain times and destinations.

The cost of a five-minute evening call to the US at Premier Line rates is pounds l.64. Bell Cablemedia, however, charges pounds 2.10 while CableTel charges a hefty pounds 2.35. Only Nynex, at pounds l.38, and Diamond Cable, at pounds l.61, are cheaper than BT among the cable companies.

For those of us who spend most of our telephone money on cheap rate national calls, followed by local calls, the message is clear. The Consumers Association calculates that the average user can save around 5 per cent by using Mercury instead of BT, and anything between 4 per cent (Birmingham Cable and Yorkshire) and 28 per cent (Nynex) by switching to cable.

The big three:

how they compare

BT is most competitive on daytime and international calls - so if you do a lot of your calling in the evenings it is unlikely to offer the best option. Line rental is a hefty pounds 24.79 per quarter and with a pounds 100 charge for connection to the system.

Mercury does not have a local network, which means you must still pay the pounds 24.75 quarterly BT line rental. But on national calls Mercury is cheaper than BT, although now it has doubled its annual registration charge to pounds 20 you have to do a lot of long distance calling before you start to make big savings. It is worth serious consideration for many people whose phone calls are predominantly outside their local area.

Cable firms are almost always cheaper. Quarterly line rentals are between pounds 5.95 and pounds 8.20, with connection as low as pounds 25-pounds 50. Many charge less if you also take TV services. On local calls cable usually costs less than BT's cut-price Premier Line service. On national calls some cable companies can be up to 35 per cent cheaper than BT, but international call charges vary enormously.