BT raises line rental charges but promises rebate to light users: Price increase announced despite Oftel's call for more cuts

LINE rental charges for BT's residential customers will rise by 73p a quarter to pounds 23.69 from 1 February, representing a real increase of 2 per cent. The change comes despite calls from the regulator, Oftel, for further price cuts totalling pounds 350m.

BT said yesterday that customers who agreed to pay their bills by direct debit could more than offset the increase with a rebate of pounds 1 a quarter - the amount BT believes it would save on processing costs.

At the same time BT is introducing a scheme for those who use the telephone rarely, amounting to savings of up to pounds 94m annually for 3 million customers.

Under the light-user scheme, which replaces existing low-user deals, BT will give a rebate of up to pounds 12.30 to people whose quarterly call bill is less than pounds 10.

The overall effect of the price changes, announced yesterday, is neutral. Don Cruickshank, director-general of Oftel, said: 'There is still some considerable way to go before BT will have complied with the requirement for the year.'

Under controls introduced in August last year BT must keep price increases to inflation minus 7.5 percentage points, which should mean cuts of pounds 500m in the year ending 31 July. So far the company has only announced net reductions of pounds 150m, partly by bringing in cheap weekend calls.

Mr Cruickshank said: 'Customers can look forward to price reductions amounting to pounds 350m in the very near future.' However, there appears to be confusion as to whether the total pounds 500m in cuts must be fed through to customers by the end of July or merely announced by then.

The regulator will also force BT, through a change in its licence, to speed up the introduction of price cuts in coming years.

BT is expected to focus the further price cuts demanded by Oftel this year on business customers.

Other changes in the pipeline include the introduction of reduced charges for frequently called numbers nominated by customers.

BT is also intending to overhaul the entire charging system to base it on the actual length of calls, like Mercury's system, rather than on 4.2p units that vary in length depending on the type of call.

BT has been asked to bar access to sex lines in Chile and Guyana pending an investigation into the services by an independent telephone watchdog, headed by Lady Dean. Advertisements for the sex lines, which appear in Sport newspapers, have mushroomed since the introduction on 1 January of a ban on advertising in generally available publications for pornographic telephone services.

The investigating committee says that advertisements for UK services have almost disappeared, but it is concerned about the influx of those for overseas services, which cost about 57p a minute to call.