Competition hits BT harder than expected

British Telecom is set to lose a much bigger slice of its domestic customer base than previously forecast as competition bites deeper into its near-monopoly of residential exchange lines, according to Don Cruickshank, the industry regulator. The latest estimate by Oftel, the telephones watchdog, is that BT's share of residential exchange lines will drop to 70 per cent by 2000, down from 91 per cent at the end of last year. Oftel's previous prediction in May was that BT would retain 80 per cent of phone lines by the millennium.

In a speech to an industry conference yesterday, Mr Cruickshank also forecast that between 70 and 80 per cent of people would have a choice of three phone companies, compared with fewer than 10 per cent in 1996. Mr Cruickshank warned BT that the competitive challenge would intensify "to the benefit of customers". The UK phone market was opened to full competition in 1991.

BT yesterday intensified the price battle with rivals by announcing a 10 per cent cut in tariffs on weekend long-distance UK calls from 17 January. BT is also cutting between 12 and 21 per cent off calls to Japan. The cuts will knock pounds 19.4m off BT's revenues, though only pounds 7.6m of the reductions form part of Oftel's domestic price formula, which began in August. The price cap only applies to 80 per cent of homes and excludes businesses.