Ref: 49/02
Date: 24 July 2002

BT has accepted proposals for modified price controls and new measures to increase competition in the residential calls market, Oftel announced today.

New licence conditions will come into effect on 1 August when the existing price controls expire.

The licence conditions will require BT to provide a wholesale line rental product to enable competitors to offer a complete service covering line rental and calls.

They will also introduce an RPI-RPI price control on BT’s lowest spending 80 per cent of residential customers to prevent increases in customers’ bills.

The control will be revised to one which pegs prices to the rate of inflation once the new wholesale line rental product has been fully implemented by BT and is being used by other operators to provide services.

David Edmonds, Director General of Telecommunications welcomed BT’s decision today:

"This is an exciting package of measures that will boost competition - but at the same time protect consumers while competition develops.

"The introduction of the new wholesale line rental product means that operators will be able to compete with BT offering a complete fixed telephony service on one bill.

"Oftel is already working closely with the industry and consumer groups to ensure that the new product is introduced as smoothly as possible."

Notes to editors

1. Oftel’s statement, including draft licence modifications - Protecting consumers by promoting competition: Oftel’s conclusions - was published on 20 June 2002. It is available from Oftel’s website at www.oftel.gov.uk/publications/pricing/2002/pcr0602.htm.

2. Oftel will maintain the safeguard price control of RPI-RPI on BT while competition is increasing. The control will be revised to RPI+0 per cent once the new wholesale line rental product has been fully implemented by BT and is being used by other operators to provide services. This will peg prices to the rate of inflation.