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Last Updated: Wednesday, 24 March, 2004, 12:36 GMT
BT fires latest shot in price war
Telephone
Telecoms companies are involved in a fixed-line price war
BT has abolished its standard rate for residential customers and introduced what it claims is a "simpler range of low prices".

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

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

BT said competitors had been using its standard rate charges to illustrate claims that they offered lower prices.

Gavin Patterson, group managing director of BT Consumer and Ventures, said the changes would put a stop to competitors claiming a price advantage.

New BT Together Option 1 charges
Line rental 10.50 per month
Evenings and weekends 5.5p for up to an hour per call, 1p per minute thereafter
Daytime 3p per minute, 5p minimum call charges apply
Source: BT (Standard rate customers are being migrated to Together Option 1 )

"They mean that arguments by other operators about how their prices compare with BT become virtually irrelevant," he said.

BT also pointed out that many of its customers had avoided paying the standard rate by opting for packages offering cheaper calls in return for a monthly fee.

Up to nine million of BT's 19 million residential customers currently pay the standard rate.

BT clever

According to uSwitch.com, a website offering independent advice on changing energy and phone supplier, BT customers will in the main benefit from the change.

Under the standard rate structure, calls cost 1p per minute (local) and 3.95p per minute (national); under BT Together Option 1 users are charged 5.5p for an hour-long off-peak phone call nationwide.

In addition, daytime calls fall from 3.95p per minute (local) and 7.91p per minute (national) to a flat 3p per minute.

Overall, uSwitch estimate that average phone users will save 24 per year by being moved from standard rate to BT Together Option 1.

Standard rate charges
Line rental 9.50 per month
Weekday evening calls 3.9p per minute (national) 1p per minute (local)
Weekend calls 1.5p per minute (national) 1p per minute (local)
Daytime calls 7.91p per minute (national) 3.95p per minute (local)
Source: uSwitch

However, 2.5 million people who currently rent their phone line from BT but buy calls from another supplier will not welcome higher monthly line rental charges.

Monthly line rental is 10.50 under BT Together Option 1 compared to 9.50 under standard rate.

"BT has been very clever. At a stroke BT has cut prices for its customers while making its rivals less competitive. Overall, though, it is largely positive news but consumers need to remember BT is still not the cheapest provider out there," Jennifer Evans spokeswoman for uSwitch told BBC News Online.

Customers that have already switched to BT Together Options 1,2 and 3 from standard rate will see their phone bills fall according to uSwitch.

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

Dominant

BT is fighting hard to hold on to its dominant position within the UK residential phone market.

At present, BT supplies 70% of UK homes.

Carphone Warehouse has been reported as being poised to announce that it is to offer households free local calls, challenging the dominance of BT in the fixed line market.

Regulatory changes to the telecom market in 2002 allowed firms such as Carphone Warehouse to compete with BT in the fixed-line market.

The switch made it easier for people to move to rival services, which meant customers no longer had to key in a code before each call or fit another box to their existing phone socket.

How the suppliers compare
Annual bill sizes for an average user
Supplier Plan Annual bill
One.Tel CallSaver 229.77
British Gas Everycall 240 231.57
Just Dial Standard Online 231.61
Talktalk Talk 70 235.61
Tele2 Standard 236.57
BT Together Option 1 243.36
Telco Select + Together 244.35
Source: uSwitch (Prices as of 1 July, based on three calls all times of day)




WATCH AND LISTEN
Gavin Patterson, BT Group Managing Director
"Another example of us improving value for our consumers"



SEE ALSO:
Phone users miss out on savings
23 Mar 04  |  Business
Carphone targets home market
08 Oct 03  |  Business
BT directory calls to cost more
27 Feb 04  |  Business
BT to cut call charges
02 Apr 03  |  Business


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