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Last Updated: Wednesday, 31 March, 2004, 14:57 GMT 15:57 UK
Rivals complain over new BT rates
Telecoms companies are involved in a fixed-line price war
The Office of Communications (Ofcom) is to see if BT's new residential retail tariff packages for line rental and calls breach competition rules.

Ofcom said the probe follows contact from BT's competitors concerned the new tariffs will distort competition in the market for residential calls.

The case is being considered and Ofcom expects to make an initial finding within the next four weeks.

It may make an interim measure calling on BT to cease or reverse the tariffs.

All together now?

Last week BT said it had abolished its standard rate for residential customers and introduced what it claimed was a "simpler range of low prices".

Existing standard rate users would have moved to BT Together Option 1, meaning higher line rental in return for cheap calls.

BT claimed UK national calls would be cheaper under the new plans than with many of its major rivals.

But now Ofcom has received representations other operators who compete with BT "in the provision of voice calls in the residential market by offering consumers a carrier pre-select service(CPS)".

These rival telecoms operators need to route calls over BT's network using a wholesale service provided by BT.

An Ofcom spokesman said: "These firms are concerned that BT's retail tariff packages for line rental and calls, when combined with the wholesale price they must pay BT for call conveyance, will distort competition in the provision of residential calls."

Revenue pressures

BT had said the changes, the first of which is due on 1 April, would put a stop to competitors claiming a price advantage.

Its new pricing policy for BT Together Option 1 will take effect on 1 July.

BT has seen some of its customers signing up for cheaper offerings from rivals, putting pressure on its revenues.

But BT, which has nearly 20 million users, is still far bigger than its rivals, who together only have 3m customers.

"If Ofcom concludes that there is a case for the interim measures, the options available would include a requirement upon BT to cease or reverse the proposed new tariffs," the regulator said.

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