BT thumped by new competition proposals

'Very good news' says Centrica

BT faces the threat of stiffer competition from rival operators following the announcement of reforms from telecoms watchdog Oftel.

Top of the list is the opportunity for companies to offer a complete residential telephony service to consumers.

BT will be forced to provide a wholesale line rental product to rival telcos on the same terms as it does to BT's retail business.

Such a move could pave the way for a whole new range of tariffs, such as the introduction of flat rate subscriptions and unlimited phone calls. It could even see line rental scrapped altogether with new pricing models introduced.

And in the future, it means customers who ditch BT will no longer receive two bills. Up until now, customers who opt for a rival telco still would receive a BT bill for line rental and one from their telco for call charges.

Centrica - which has more than a million phone customers under the One.Tel and British Gas Communications brands - described today's announcement as "very good news".

"One thing that has really annoyed our customers is receiving two bills," said a spokesman for Centrica.

"Now we will be able to own the whole relationship with customers whereas before we've had to share our customers with BT," he said.

David Edmonds, head of Oftel said that the introduction of a new wholesale line rental product which will enable other companies to provide a national-wide complete telephony service under one bill, offering "a real alternative to BT".

Said Mr Edmonds: "Operators made it clear that providing a single telephone bill would enable them to offer a variety of packages to consumers such as a single flat rate charge for all calls or the abolition of the line rental.

"Oftel will work closely with BT, other operators and consumer groups to ensure that a commercially viable product is introduced as smoothly as possible."

The regulator has also introduced new price controls for BT's lowest-spending 80 per cent of residential customers. From August, their phone bills will fall by the rate of inflation.

Once the new wholesale line rental arrangements have been fully introduced, this price control will be scrapped and BT will be allowed to increase its prices but only by as much as the rate of inflation.

By late morning shares in BT were down 9.75p (3.78 per cent) to 248.5p. ®

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