Watchdog forces BT to postpone price cuts

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The Independent Online
The telephones watchdog, Oftel, is to issue an order this week forcing BT to postpone plans to slash the price of its high-speed digital communications services after rivals claimed the cuts were anti-competitive.

However, the company yesterday insisted it would go through with the price reductions, due to start from today, threatening further confrontation with the regulator, Don Cruickshank. A BT spokeswoman explained: "The cuts will have to go ahead from midnight on Sunday night because we physically can't stop them."

BT said it was "surprised and perplexed" by the announcement from Oftel, which was made in a letter from Mr Cruickshank, received at 6pm on Friday.

The company questioned why it had taken the regulator so long to ask for the price regime to be postponed. The new charges have already been advertised and some customers have been signed up on the basis that the price structure would change.

The price cuts were announced on 21 August, allowing a month for industry consultation. They reduce the initial ISDN connection charge for small businesses from pounds 400 to pounds 199, but raise annual line rental from pounds 336 to pounds 520. In addition, customers would get a "bundle" of free calls worth pounds 90 in the first two years and pounds 210 in following years.

Oftel had previously been concerned that the high cost of BT's digital ISDN systems, which allow extra services such as videotelephony to run down ordinary phone lines, was preventing a greater take-up by small and medium-sized companies.

But last night an Oftel spokesman confirmed that other operators had claimed the cuts were anti-competitive. The formal order requiring BT to postpone the reductions will be issued today or tomorrow.

The complaints came from rivals such as Mercury, which accesses smaller customers using BT's local telephone network and a special button on the handset. Cable TV companies are also increasingly trying to gain a foothold in the lucrative ISDN market.

They had argued that a higher rental charge with cheaper calls risked pricing alternative suppliers out of the market. Indirect access operators make their profit on the call charges, not the connection fees.

Mercury also feared that BT could move to a similar pricing policy for ordinary business phone calls when such services are excluded from price controls from August 1997.

If the cuts are cancelled completely, BT could face claims from new customers who have signed contracts based on the advertised reductions.