Deregulated BT to cut fixed-line costs

BT is set to offer customers more competitive fixed-line telephone deals after Ofcom relaxed its pricing rules citing the rise in competition.

The communications regulator yesterday announced plans to deregulate the retail telecoms market, in effect loosening ties on BT.

The FTSE 100 group can now offer discounts on its bundle of services (such as broadband and digital television) including, for the first time, fixed-line calls.

Ofcom said it had removed one of the last pieces of regulation in the retail fixed-line telephone market 25 years after BT's privatisation as it no longer held "significant market power" in most UK markets. Ofcom's chief executive, Ed Richards, said it was "an important step in deregulating telecoms where competition can be relied upon to serve the consumer".

More than 12 million UK households and small businesses use a telecoms provider other than BT. Rivals including Virgin Media, BSkyB and TalkTalk "provide effective competition to BT," the regulator added. BT has 14 million fixed-line customers.

Gavin Patterson, the chief executive of BT's retail division, welcomed the move saying: "It means BT will be competing on a more level playing field than previously." He added that BT would be announcing "exciting new offers in the near future".

Britons are increasingly taking bundled packages. In 2008, 46 per cent of UK consumers bought two or more communications services from one provider, up from 29 per cent in 2005, according to Ofcom's latest figures.

Ofcom said the rise in competition was spurred by the creation of Openreach by BT in 2005, a division that installs and maintains the "first mile" network of fibres and cables from homes and businesses to local telephone exchanges. Openreach provides services to BT's rivals on equal terms.

The Independent revealed yesterday that BT is in dispute with its workers over flexible working hours, and has turned to contractors to cover some short-term work.