Oftel probes BT prices

Oftel is raising questions about BT's prices

Oftel will investigate British Telecom's new unmetered voice and internet packages which offer unlimited off-peak access for a fixed monthly price.

We strongly resist the suggestion that we are acting anti-competitively

Sir Peter Bonfield
BT chief executive

The telecoms industry regulator will look at two BT packages announced last month: BT Talk & Surf Together, and BT Surf Together.

"Oftel must ensure that these proposals from BT do not undermine effective competition," the regulator said. BT said it was "bemused" by the watchdog's probe.

"We strongly resist the suggestion that we are acting anti-competitively," chief executive Sir Peter Bonfield said.

BT bemused by probe

However, preliminary talks between Oftel and BT have already led the telecoms company to add £2 to the intended monthly price of its talk and surf package.

Following the price rise, unlimited off-peak telephone and internet calls will cost about £20 a month when the package comes into effect on 1 December.

Those who want only free talk time or free surf time - not both - will be charged about £15 a month for BT's new offerings.

Market power

Oftel stressed that its intention was not to push up prices. On the contrary: "Oftel welcomes lower prices for consumers. However consumers' interests are best served by effective competition," the watchdog said.

The probe has dealt a fresh blow to the beleaguered telecoms company which is struggling against debt, stiff competition and pressure from the regulator to drop its prices and improve access to its network for other telecommunication firms.

BT has been accused of abusing its market power on several previous occasions. Some operators have claimed that BT is deliberately obstructing their access to the local exchanges, essential for providing high-speed internet access.

Last week, BT's rivals won a key victory when Oftel ruled that BT had acted unreasonably in its attempt to hold on to telephone line capacity rather than sharing it with other firms.

Three weeks ago, the company announced a big drop in profits and a radical restructuring plan to try to reduce its mounting debt by £10bn next year.

The market reacted negatively to news of Oftel's investigation. BT's share price fell 4.2% by 1230 GMT on Tuesday.