Phone firms set out to conquer the home front

How much do you pay to make a telephone call? Too much, if you are a British Telecom loyalist. At least, that seems to be the verdict from Oftel, the telecommunications watchdog.

This week, Oftel warned BT that despite a 40 per cent reduction in charges since privatisation in 1984, customers are still charged too much for calls.

Oftel is likely to put further pressure on BT to cut its prices from July 1997, when the current regulatory arrangements end. Perhaps even more importantly, other service providers may also be charged less for calls they route via BT.

The European Commission is also likely to take action to bring down the price of calls, particularly those between EU states.

Despite a fierce rearguard action by BT to defend its market dominance and Mercury's change of emphasis away from the domestic market, there is now greater competition for large-spending domestic phone users.

Despite a change in approach at Mercury (0171-528 2000), it maintains that its many domestic long-distance users and international callers can save money. Earlier this year it repackaged its services into its Smartcall service, offering a single national rate.

Other new entrants have recently entered the market. Broadsystem (0345- 160200), part of the News International empire, claims to be 20 per cent cheaper than BT on national calls, and up to 30 per cent cheaper on international calls. It costs just pounds 1 to join and the service is now available across the country, but members must dial 1602 in front of the number they call.

First Telecom (0171 363 6600) promises even cheaper international calls, at rates of up to 70 per cent off BT's charges. Members must pre-pay for calls by ensuring that their account is in credit. They will have calls cut off when their pre-payment runs out.

Another inconvenience is that they must dial an 0800 number before they can make their call - but one advantage is that they can make international calls charged to their own account from any phone, and can use the service in the US or Canada to phone home. There is no joining fee.

In about a month's time First Telecom also launches a national service which should be about 20 per cent cheaper than BT.

A growing player is Energis (0171-206 5555). But it is concentrating on services to businesses and supplying national links for some cable operators. Self-employed homeworkers, though, can join, and Energis says that calls are a minimum of 10 per cent cheaper than BT's.