BT faces new probe on prices

TELECOM industry regulator Ofcom has signalled a major competition probe into BT's new residential call charge tariffs.

The move is a blow for BT which announced the new rates just last week.

Ofcom's decision comes just days after MPs slammed telephone bills as so confusing that maths geniuses are probably the only ones who can work out whether they're getting the best deal from their existing provider.

Ofcom said it plans to investigate whether the call and rental tariff package BT unveiled amounted to an abuse of a dominant position.

The regulator also said it was considering interim measures under which it could ask BT to abandon its new tariff plan.

The new BT tariffs would force customers of its rivals to pay more in line rental. Ofcom said it had received complaints from 13 parties, including several of BT‘s rivals, against the tariff plan. The new rates are due to start from 1 April.

BT had presented the new tariffs as good for consumers, claiming that many would find their bills dropping later this year.

The tariffs did see BT abolish its standard rate package, affecting about 9m residential customers who were to be transferred onto one of its three BT Together packages, under which call charges are lower but line rentals are higher.

BT insisted that it remained confident the tariff plan would meet legal and regulatory requirements.

BT controls about 72% of Britain‘s home phone market and has been accused by smaller rivals of resorting to unfair practices to protect its dominance - rivals depend on its lines to connect homes to telephone exchanges from where they transfer calls on to their networks.

Carrier pre-select (CPS) rivals such as Carphone Warehouse, Sweden's Tele2 and Centrica's OneTel offer rival fixed-line services, but their customers get two monthly bills, one for the actual calls and the other for the line rental, which goes to BT.

BT has seen a steady trickle of its customers signing up for cheaper offerings from rivals, putting pressure on its revenues. But with just 3m customers they remain tiny by comparison with BT, which has about 20m customers.

'If Ofcom concludes that there is a case for the interim measures, the options available would include a requirement upon BT to cease or reverse the proposed new tariffs,' Ofcom said in a statement, adding that it expected to decide within the next four weeks.