BT cuts £24 off average bill

Telephone bills are set to fall in a new price war after the biggest shake-up of BT's landline charges since privatisation.

Independent operators are responding with aggressive new prices which will still undercut BT's rates, according to analysts.

Nine independent phone companies have reduced their rates to match the BT move and a further four - Telewest, Just Dial, Tiscali and Equitalk - are set to make changes at the start of next month.

Analysts are braced for further price cuts from new companies such as One.Tel and TalkTalk as they fight to win customers from BT.

John Miller, director at price monitoring company uSwitch.com said: "We fully expect more price reductions over the next few months."

He said the next pricing " battleground" would be calls made from landlines to mobiles. He added: "While the cost of calling may be coming down, the fact remains that consumers will still be charged a minimum of ?31.50 a quarter before they've even made a call.

"BT is still not the cheapest supplier in the market, switching is easy and you can make significant savings by shopping around."

BT will move about nine million customers still on the standard tariff to one of three new discounted rates in two days' time. However, BT will still be about ?42 a year more expensive than its cheapest rivals on average, costing consumers a total of about ?£1 billion a year.

Ian El-Mokadem, managing director of One.Tel, said: "It's astounding that so many people continue to waste money by sticking to BT despite it being the most expensive telecoms provider in the home telephones market."

For an "average" user making three calls a day, BT's Together Option 1 package will cost a typical £244 a year against £222 a year for the cheapest rival One.Tel.

For a "medium" user making up to nine calls a day, BT's Together Option 2 will cost £314 against £283 for One.Tel.

A "high" user making up to 15 calls a day, will have a bill of £479 for BT's Together Option 3 against £401 for Euphony's best tariff.

BT hit back by saying its new tariffs would make it easier for customers to make a true comparison between its rates and those of its competitors.

Gavin Patterson, group managing director for BT Consumer and Ventures, said: "One of the great benefits for customers is that all our rivals will now have to make realistic like-for-like comparisons rather than trotting out comparisons with our most expensive standard rates.

"We expect customers... to see exactly how small the gap is between us and the few rivals who undercut us."