Should you get in touch with cable?

BT is facing some strong competition, writes Stephen Pritchard

Two -and-a-half million households have now switched to cable, and not just for the extra television channels.

Telephone calls can also go down cable lines and last week a Which? report said most BT users would be better off using cable for phoning. The cable operators claim savings of 10 to 25 per cent on BT's prices.

You can still keep your BT line but getting cable does mean a new connection, which can cost up to pounds 50. You do not have to subscribe to cable television to get the cheap telephone services, although if you do take both the connection fee is often waived.

Half a million more people use cable phones than are signed up for cable television and the competition clearly worries BT. Last week Oftel, the regulator, judged that a BT marketing campaign unfairly targeted cable customers. The regulator banned it as anti-competitive. The offer had promised a discount of 25 per cent on the first quarter's calls to customers without a BT line. BT told Oftel the campaign was aimed at households with no phone line at all. The watchdog acted after complaints from cable operators, which alleged that BT was using the offer to poach customers.

Cable offers a number of distinct cost advantages (see table). Line rental is lower than BT's, if only slightly. For those without a line at all, connection charges are lower than BT's, and calls cost less. Nor, contrary to popular belief, do you need to change telephone numbers, although there is normally a charge for taking your old BT number with you. Nynex's fee, for example, is pounds 19.99. (Note, you can also keep your old BT line while getting connected to cable, giving you two telephone lines, if you so wish.)

Some cable companies, including Videotron and Nynex, give free local evening and weekend calls between their subscribers. This is a potential benefit for parents of chatty teenagers, also to Internet users, provided their Internet operator is a cable customer.

Eight million homes can now get cable, including most metropolitan areas. Different companies supply different areas (there is no cable competition) and how they compare with BT varies from area to area.

The National Cable Information line 0990 111 777 will give details of your local company.

Cable companies are not always as open about their pricing as they could be. Direct mail-shots from a number of operators to households, seen by the Independent on Sunday, fail to spell out call charges. Instead they make "average" comparisons with BT based on a typical bill. This is worrying, and strange: the letters also contain application forms for service, so households might be encouraged to sign up for cable without having full details about the costs. Given that cable operators are cheaper than BT for most calls, it is peculiar that they fail to spell this out. Anyone who is thinking about cable should insist on seeing the full, retail call price list before signing.

The decision is complicated further by bundles of television and phone services. Videotron customers taking cable and phone services save 85 pence a month, including VAT, and the company waives connection charges for both. Telewest's most basic combined service package is pounds 19.95 a month, or pounds 2.60 a month cheaper than the two separate bills. The cable television subscriptions themselves vary quite widely between operators, although customers save because there is no need to buy a satellite dish.

Satellite-style dishes themselves can be another way to save on phone charges. Ionica, a phone company in Cambridgeshire, is not a cable operator but uses a system based on mobile phone technology to compete with BT. Another radio-based system, Atlantic, operates in Scotland and has especially competitive rates for longer-distance calls north of the border. BT is facing up to this growing competition by stressing the quality of its service. It claims that pricing can be deceptive: 63 per cent of customers returning to BT from cable say that their cable phone bills were higher than they expected. BT's range of discounts for high-spending customers, such as Premierline, have narrowed the price gap. And few cable companies are able to match BT's Light User Scheme, which reduces line rental for subscribers who spend less than pounds 12.69 a quarter on calls.

Another potential problem with cable is that some companies, such as Videotron, set a limit on the phone bills their customers can run up. Subscribers can ask for higher limits but the firm reserves the right to suspend service.

This could cause problems for anyone who faces unforeseen circumstances: a relative overseas who falls ill, or an unexpected week working from home. Videotron's terms and conditions state: "In exceptional circumstances, we can suspend the telephone service ... if it appears that the service is not being used by you in a manner consistent with your previous use." The operator maintains that this takes place rarely. Anyone whose phone use varies widely would be wise to check with the company.

But even if cable is not for you, you might want to consider some of the telephone services now available that offer cheap national and international calls and that do not require a new line, for example First Telecom (0800 376 6666) or BT's main competitor, Mercury.

CABLE PHONE CHARGES

Operator: Connection Rental Local National

Bell Cablemedia pounds 25 pounds 6.90 2.96p 6.59p

CableTel UK pounds 50 pounds 7.951 3.20p 8.30p

Comcast Europe pounds 40 pounds 4.28 3.76p 7.64p

Yorkshire Cable pounds 25 pounds 7.50 3.16p 7.91p

Cable Corporation pounds 35 pounds 7.00 3.16p 7.91p

Nynex Cablecomms pounds 25 pounds 7.11 2.97p 6.60p

Telecential pounds 20 pounds 7.50 3.70p 7.80p

TeleWest pounds 30 pounds 7.56 3.55p 7.91p

VideoTron pounds 35 pounds 7.10 3.41p 7.87p

Birmingham Cable free pounds 7.50 3.02p 6.30p

Cable London free pounds 5.99 3.50p 8.00p

BT pounds 9.952 pounds 8.56 4.00p 8.80p

1Includes basic cable TV; 2takeover of existing socket - a new line costs pounds 116.33.

All call costs are for peak rates in pence per minute. All prices are as supplied by the operators and include VAT. Most companies have a minimum call charge. Line rental is monthly.