Watchdog to end BT price curbs

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The Independent Online

Price controls on line rental and calls with BT are set to be lifted this summer under proposals published by the UK telecoms regulator today.

The move comes 22 years after the privatisation of BT and was justified by regulator Ofcom on growing choice in the telecoms market, including the spread of mobile phones and broadband.

Ofcom said more than 10 million households now use telecoms firms other than BT for their phone calls, including more than 4 million on cable networks.

Mobile phones accounted for a third of all voice calls in the UK from July to September last year, while telecoms firms have been active in putting their own equipment in BT exchanges so households can use their services.

In addition, the regulator believed that the number of people who make calls over the internet will snowball from the current base of more than 500,000.

"Given this, Ofcom believes it is now appropriate to consider allowing existing retail price controls to lapse as increasingly effective competition between providers continues to drive down costs to consumers," the regulator said.

Public consultation will now take place on the proposals, which are due to take effect from 1 August.

Ofcom said safeguards to protect vulnerable groups were welded into its proposals and there were no changes to regulation in areas other than price, such as BT's commitment to provide a standard phone line to remote areas.

BT has given specific price pledges in areas such as termination rates - the cost of putting calls through to mobile phone operators - which will remain in place until the end of 2007.

By then, Ofcom will have conducted a fresh review of the retail market to assess the impact of deregulation and whether consumers are benefiting from growing competition.

With more than 10 million households having access to broadband, the regulator said services such as Voice over Internet Protocol (VoIP) should become more popular as they offer a cheaper option to traditional fixed-line calls.

Stephen Carter, chief executive of Ofcom, said: "More than 20 years on, sustained competition, informed customers and the rapid growth of new technology provide the necessary environment for substantial deregulation."