Ref: 14/02
Date: 26 March 2002

Oftel today announced two significant relaxations in its regulatory controls on BT.

First, following analysis of competition in the international wholesale calls market, Oftel has lifted controls on 20 international routes where competition is now established.

From today, BT needs to give Oftel only one day’s notice of price changes, and can reduce prices to below cost without Oftel’s consent.

David Edmonds, Director General of Telecommunications, said:

"Competition is delivering real benefits to consumers.

"Two hundred operators now offer competing calls services on international routes. The 20 routes deregulated today include calls to India, Pakistan and Turkey.

"46 routes, covering 83 per cent of calls from the UK, are now effectively competitive. In 2001 consumers paid on average 20 per cent less for international calls than in 2000 and over 50 per cent less than five years ago."

Oftel has also today announced that it has relaxed BT’s 28-day period of notification of price changes which has existed since 1984.

Following consultation, Oftel has decided that the regulation – designed to give other companies time to respond to price changes – may actually reduce the incentive to make price reductions as competitors may simply follow BT’s price changes by setting their prices relative to BT’s.

The regulation will initially be reduced on a trial basis to monitor its effects on competition. After 18 months Oftel will make the reduction permanent if it is appropriate to do so.

David Edmonds said:

"Oftel has relaxed regulation in order to stimulate competitive pricing on the part of BT and its competitors.

"The 28-day notification period made it easier for companies to change their prices in response to other companies’ price changes.

"These changes will encourage companies to compete more dynamically, offering better deals to consumers across a range of services."

Notes to editors

1 Competition in International Markets and BT’s regulatory obligations to provide advance notification of price changes and to maintain a published price list are published on Oftel’s website at www.oftel.gov.uk/publications/licensing/index.htm. Hard copies are available to the press from Oftel’s Press Office on 020 7634 8991 and to the public from Oftel’s Research and Information Unit on 020 7634 8761.

2 Oftel is conducting a further consultation arising from its work on BT’s obligations to provide advance notification of price changes relating to electronic auctions. Details of the consultation, which closes on 23 April, can be found by following the link above.