Ofcom ends BT price controls

Free to float, or sink...

Update: Telecoms regulator Ofcom has removed retail price controls on calls and line rental for BT customers from 1 August.

BT has had its retail prices controlled since privatisation 22 years ago. The regulator says it can make the change because competition is working.

Ofcom's statement said: "The removal of retail price controls is enabled by - and reflects - the rapid growth of competition and continued reductions in the cost of phone services for customers. More than 10.7 million households and small businesses now use providers other than BT Group plc for their phone calls - including more than 4.6 million cable customers - and the UK has some of the cheapest phone costs in the world."

A spokesman for BT told the Reg it was welcome news but it was too early to say in detail what the changes would mean for customers. He said: "We'll look at packages and there'll be a mixture of re-aligning prices which we think customers will like."

But a statement from the UK Competitive Telecommunications Association, funded by BT's rivals, expressed some doubts: "UKCTA has reservations over Ofcom’s decision to rely on "confidential pricing reassurances" from BT. This leaves something to desire in terms of transparency of regulation and leaves other communications providers and consumers in a position where they are unable to judge whether those assurances are in fact adequate.

UKCTA is also concerned about the potential for customers to be confused as a result of the media campaign which Ofcom will be launching in order to publicise the removal of the price controls. Millions of customers of other operators have already experienced the benefit of the ability to choose between competing tariff packages and are deciding themselves whether or not their phone company is providing value for money. Removal of the price controls does not alter this choice, a fact that UKCTA’s members will be eager to ensure their customers understand."

Johanna Hellstrom, research analyst at Ovum, said: "It's not a massive surprise and if it does create any problems for competitors the market review next year will pick it up. Wholesale is still regulated but for consumers it should mean more inventive bundles from BT."

Chris Williams, product manager for telecoms at Uswitch, said: "We give this a cautious welcome and its the right time to do it - there's real competition in the market now."

Williams said he'd like to see BT cut line rental charges - but he predicted they will increase it. He expects BT to offer more bundles and simplified pricing: "with the aim of moving people to fixed costs rather than charging by call."

He also welcomed Ofcom's publicity campaign which starts tomorrow.

More from Ofcom here and BT here.®

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