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Ofcom proposes to free BT from price controls

Competition rules

The smart choice: opportunity from uncertainty

BT could be free to charge what it likes for phone services such as line rental and call charges if proposals to scrap 22 years of price controls get the go-ahead. Regulator Ofcom says there is now sufficient competition in the UK's telecoms sector to release BT from its price constraints and allow the market to work without regulatory intervention.

Ofcom claims that average call prices have fallen by more than half over the last ten years and that more than 10m households use telcos other than BT for their phone calls. It also points to the increased take-up of VoIP and local loop unbundling as further signs of improved competition in the UK.

"Given this, Ofcom believes it is now appropriate to consider allowing existing retail price controls to lapse as increasingly effective competition between providers continues to drive down costs to consumers," the regulator said today. "These developments are also taking place against a background of continued growth in the market for mobile services."

Although Ofcom wants to see a free for all, its proposals include some measure of protection for vulnerable groups that would stay in place until the end of 2007. If adopted, the changes would come into force from 1 August.

"More than 20 years on, sustained competition, informed customers and the rapid growth of new technology provide the necessary environment for substantial deregulation," Ofcom chief exec Stephen Carter said.

However, there are already mutterings that the decision to lift regulation on BT has come too soon and that consumers could lose out in the long run. Indeed, Ofcom will have to ensure that its deregulation of the telecoms industry is handled better than the liberalisation of the director enquiries (DQ) industry.

Last year the National Audit Office (NAO) said the regulator made a hash of deregulating the UK's service, leaving punters paying more for a service they're using less.

The report added that Ofcom could not "yet demonstrate that, overall, consumers have benefited from liberalisation". ®

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