Hold the line for cheaper calls

Fed up with BT? There are now plenty of other telephone services

PEOPLE who still think BT is charging them too much - and the company's announcement last week of a 13 per cent increase in pre-tax profits to pounds 3bn will do little to dissuade them - may be tempted by an increasing number of new, cheaper phone services, typically offering lower-cost long-distance and international calls.

Since last week people in the Anglian TV region - from Milton Keynes to the east coast - can subscribe to a new phone service from a company called Ionica, which uses digital radio technology. The company says all calls (even local) are on average 15 per cent cheaper than BT's, while line rental is 20 per cent cheaper. There is also a 70 per cent saving on second line rental.

Moreover, features such as Call Barring (which can be used to prevent children ringing chatlines) and Caller Display (which tells you who is ringing without you having to pick up the phone), for which BT charges, are free with Ionica. A further free facility is the provision of different ringing tones for each household member.

Ionica's service will gradually expand across the whole of England, Wales and Northern Ireland, with a parallel service being operated in Scotland by Scottish Power. The consortium behind Ionica's venture is a strong one, including Yorkshire Electricity, Northern Electric and Telecom Finland.

Across the country there are a number of other telecoms suppliers that have already entered the market. Many of these, though, can only be used in conjunction with BT lines (requiring you to pay BT line/phone charges on top of any fees for the supplier). Some do not offer local calls, and some require pre-payment. Consumers may be wise to satisfy themselves of the solidity of a company before they hand over cash in advance.

Mercury is the most well-known of the alternative suppliers. Its lower call charges have to be balanced against the pounds 20 annual fee on top of BT's subscription charges (see table).

Another substantial new entrant is Broadsystem, a News Corporation subsidiary, which provides the Call 1602 service, and which does not have an additional service fee on top of BT's line charges. As the name suggests, each call must be preceded by the number 1602 to gain entry to the Broadsystem network, which may become an irritant to heavy phone users. But for those willing to put up with this drawback, its claimed savings are around 20 per cent on national calls and up to 30 per cent on international calls.

First Telecom is also an established and well-capitalised operator. It has been running since May last year, and now has 30,000 customers. Customers need to keep their accounts in credit, and dial an 0800 number to enter the network, but are then offered savings of up to 70 per cent on international and 20 per cent on national calls.

London Electricity is offering its customers cheaper long distance and international telephone calls through a tie-up with ACC, a US telecoms company. Its scheme has no fees or prepayment - although you still have to pay BT's line charges - and claims to offer savings of 25 per cent or more on long distance and international calls.

Cable-operated services are also likely to become increasingly available. By the end of this year three million homes will be passed by a cable line.

Charges on cable vary. Some companies offer free evening phone calls. Telewest, which has the largest number of cable franchises, provides local calls at 1p per minute at weekends, a 40 per cent saving on national calls, and a 15 per cent reduction on line rental compared with BT.

BT's prices have also come down and it now has a range of schemes offering savings (see table). One, Friends & Family, was recently made free. It offers a 10 per cent discount on calls to five specified numbers.

This month, Barclaycard announced a deal for its card users that will allow them to charge calls from outside their home to their Barclaycard at no cost. Cardholders ringing from hotels may find the service particularly useful as a way of sidestepping hotel surcharges.

In the future the Internet may allow users to make international calls at a fraction of the price charged by BT. It is already possible to make phone calls through Internet connections, providing a home PC is fitted with sound equipment, but until now this has given poor quality sound. However, software is being developed that is likely to provide phone-quality voice communications on the Internet - and to any phone number.

Mercury, 0171-528 2000; Broadsystem, 0345 160200; First Telecom, 0800 376 6666; ACC 0800 100222.

It's cheaper to talk

Company Monthly fee National call Weekend call to peak per min US per min

BT pounds 7.03 8.4p 32.2p

Mercury pounds 20pa plus BT 6.4p 26.9p

subscription

First Telecom 0 6.2p 11p London

14p elsewhere

(All calls prepaid. Requires BT subscription.)

Broadsystem 0 6.91p 22.5p

(Requires BT subscription.)

Telewest* pounds 7.92 8.17p 34p

BT customers can reduce their bills through schemes including Friends and Family (10 per cent reduction on five specified destinations, free); PremierLine (15 per cent reduction on calls, costs pounds 24 a year); Option 15 (10 per cent reduction on calls, costs pounds 16 a year); Light User scheme (60 per cent off line rental for those with quarterly bills of less than pounds 10.80).

* Telewest local calls off peak cost 1p a minute. BT's cost 0.85p