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BT plans free local calls

BT is considering offering "free local calls" for domestic customers coupled with higher line rental charges in a move which could transform Internet use in the UK.

A BT spokesman says that the company is looking at a range of possible new "packages" in its campaign to beat back competition from the likes of Mercury and the cable companies.

One favoured route, which would bring the UK into line with America and Asia, would be to slash charges for local calls and charge a higher quarterly line rental instead. Such packages could also cover a mixture of local and international calls for BT's 20 million-odd residential customers.

In the US, where Internet usage per head is by far the highest in the world, individuals benefit from packages which offer "free" local calls coupled with a premium line rental charge. Since Internet access is charged at local call rates, a "free" local rate could make all the difference to UK Internet users.

Many IT observers fear that Internet usage in the UK has been hampered by BT's local charges. A BT spokesman denied this yesterday, saying that local calls cost just an average 1p a minute on weekends. "We already offer a number of services, such as Premier Line, where customers pay pounds 24 a year and get 15 per cent off their call charges."

The spokesman said the "free local calls" idea was "just a gleam in the eye" of the company for the moment. "We would need regulatory approval for any such move."