Telephone prices to rise by up to 20%

British Telecom is to raise the prices of telephones and fax machines by up to 20 per cent, following a ruling by the industry regulator, Oftel, that it was unfairly subsidising equipment sales.

BT said the price of an ordinary phone would rise by about pounds 5, a cordless model by pounds 10 and a middle-range fax machine by pounds 45.

The Oftel ruling followed complaints from other equipment manufacturers that BT unfairly priced its products in the pounds 1bn a year telecoms equipment sector. BT denied it was engaging in cross-subsidisation, but said it had announced the price increases to comply with the ruling "as quickly as possible".

Don Cruikshank, Oftel's director-general, said: "Oftel has been investigating complaints from a number of BT's competitors about the supply of telephones, answering machines and fax machines in the domestic and small business market.

"I have concluded that BT's supply of such equipment in the wholesale market and from BT shops and other retail channels is unfairly subsidised."

Oftel conceded that the immediate effect of BT's response to the ruling would be to raise prices for consumers. But in the long run, consumer choice would be protected by ensuring that competitors operated on a level playing field with BT.

Share issues, page 18

Comment, page 19