BT set to bring in new price regime
Wednesday 31 May 1995
BT is expected to announce a series of price changes today, including charging by the second for calls. The move to prices based on the exact duration of calls rather than half-minute units will be welcomed by consumer groups as it will allow customers to understand their bills more easily and decide which telephony company provides the best deals.
Mercury, BT's leading rival, already charges by the second and has used this advantage as a marketing tool. City analysts have been waiting for BT to adjust its charging method. Analysts are also expecting some cuts in international call charges over the next few months. BT has a market share of 70 per cent on international calls compared with 85 per cent in the market as a whole.
BT's price changes will form part of cuts it makes under the control set by the regulator, Oftel, which aim to reduce bills by about pounds 400m a year. The control, which limits increases to inflation minus 7.5 percentage points, is due to run until the middle of 1997.
The price moves also come as the Consumers Association prepares a hard- hitting attack on BT's charges compared with those offered by the cable television and telephony firms. A report from the CA, due this week, is expected to show a substantial gap between BT's prices and those offered by cable firms, which are taking thousands of BT customers every week.
Earlier this month, BT promised to step up its campaign against the cable onslaught, which is regarded as the biggest threat to its local services. Michael Hepher, group managing director, said that "armies" of BT employees would be sent out later this year to talk to consumers and persuade them that they should stick with - or come back to - BT.
The CA may also extend its attack to the difficulty of getting information from BT and other telecommunications firms. It is understood to have requested better information from BT many times in the past and been dissatisfied with the response. The CA was also angered at the way in which recent price changes were announced by Mercury Communications. There is a view in the CA that price cuts are hyped too much, with the less advantageous changes played down in a way that can be misleading and leave people feeling confused.
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