As with most other privatised utilities, the telephone market is confusing for users trying to find the best deal. Steve Thorpe, membership services manager of the Telecom Users Association, says: "I am not sure the residential consumer is aware of the possible savings they can make. I am not even sure it is very easy to understand." There is also a threshold before they can make savings, he added. "Charges are so diverse that it can be difficult for someone who is still with BT, and has got Friends and Family and the Best Friend option, and other services, to compare with Cable & Wireless [owners of Mercury and several cable companies], Ionica or other companies to see if they can make savings."
In fact, says Mr Thorpe, it may not even be worth taking the time to compare the myriad phone offers to see which is marginally cheapest. "Just go for it," he suggests. "Start with a supplier you understand, and as time moves on see if there is something better. Businesses switch carriers all the time."
A significant barrier for consumers wishing to switch phone suppliers has been the inability to transfer their existing phone numbers. Ionica, a telephone company that uses radio technology, has always allowed consumers to keep their BT number: some of the cable companies have not. But industry regulator Oftel said last month that the number portability problem had been solved: consumers could now switch between companies and keep their numbers.
At the time Don Cruickshank, director of Oftel, said: "Now customers can move between any operator to ensure they are getting the best quality of service at the best price, without the inconvenience of having to change numbers." Unfortunately in practice in many parts of the country it is still not possible to carry an existing BT phone number to a cable supplier.
A spokesman for Oftel admitted that some of the "small" cable companies still did not have the software to enable number portability. A representative of the trade body, the Cable Communications Association, agreed: "Some cable companies have been faster in doing this than others." Diamond Cable, which operates across much of the East Midlands, is one of the companies that still does not offer number portability.
Another problem is that only BT, Ionica and the cable companies offer a fully integrated service: that is, to use other service providers it is necessary first to dial into their network, either by pressing a Mercury button or by dialling a prefix, such as 1602 for the Dial 1602 service. This can be inconvenient for high-volume customers. One solution for frequent users, such as home workers, is to obtain a control box, for installation between the phone and the junction box, which automatically directs long-distance calls to the cheaper operator. First Telecom provides these free to business customers.
The number of companies offering cheap phone services is still growing. Most only offer long-distance and international call savings, but ACC and Dial 1602 - run by Broadsystems, part of News International - both now compete against BT on local calls. ACC claims to be 5 per cent cheaper than BT on local calls, 15 per cent cheaper on national calls and 20 per cent cheaper on international calls. There is no registration fee, the account is billed in the same way as with BT and customers continue to rent their line from BT.
Dial 1602 claims its local calls are 5 per cent below BT prices, with long-distance and international calls 30 per cent cheaper. Local call charges are also likely to be cut substantially soon. All customers must agree to pay by direct debit and there is a quarterly fee of pounds 2.50. Consumers continue to rent their phone line from BT. Customers of Sky TV can use the Dial 1602 service without being charged the quarterly fee, but call savings are slightly lower at 20 per cent.
Other companies offering major savings on long-distance and international calls over BT include Swiftcall, Oystel and First Telecom. Each operates a tariff structure almost as complex as BT's, making comparisons difficult. Some focus on specific market sectors - Oystel specialises in ethnic minorities and groups with families and friends in Africa, India and Pakistan. Pre- payment is necessary with Swiftcall, First Telecom and Oystel.
For some people the savings from using an alternative phone company - for all calls, or just long distance or international - will be marginal. People who stick with BT should ensure they use Friends & Family discounts, worth 10 per cent on 10 nominated numbers, and the Best Friend scheme, worth 20 per cent on one chosen number.
Internet telephony is likely to be the next factor in the drive to force down prices. Although it has been possible for a few years to use the Internet to make international calls for the price of a local connection, the quality has been poor. Companies such as Swiftcall are working on software improvements that could make a major reduction in costs on international calls. Swiftcall says it expects to announce its Internet-based telephony service in spring or summer this year.
Contacts: ACC, 0181-400 4400; Broadsystems/Call 1602, 0345 160200; Cable & Wireless/Mercury, 0171-528 2000; First Telecom, 0800 376 6666; Ionica, 08 456 456 456; Oystel, 01189 569 123; Swiftcall, 0800 769 0000.