Ref: 55/03
Date: 7 October 2003

Oftel welcomed today BT’s announcement of a 15 per cent cut in its handset rental prices from January 2004, with a further price cut of 10 per cent off the current price at the beginning of 2005. These cuts follow an investigation by Oftel, which Oftel has now closed.

Most consumers currently pay between £16 and £20 a year to rent a phone, depending on the type of handset rented from BT.

However, even with this price cut, buying a telephone could be a much cheaper option, as a basic corded phone costs from under £10, with prices going up to £40 depending on the model.

BT has around 2.5 million residential rental customers, some of whom rent more than one handset.

David Edmonds, Director General of Telecommunications, said today:

"I very much welcome BT’s decision to lower its prices. The 25 per cent price cut will save consumers about £11m a year, which is a significant saving.

"Oftel’s research shows that many people who rent telephones are elderly or on relatively low incomes, so reduced rental prices will be of particular benefit to these people.

"Oftel’s research has shown that many consumers continue to rent a telephone through inertia and simply do not appreciate how inexpensive basic handsets now are. At my request, BT has agreed to include information in consumers’ phone bills to make all rental customers aware of their option to buy a phone.

"Oftel has been investigating BT’s prices for renting telephones to residential customers under the Competition Act. In the light of BT’s decision to reduce its prices and its commitment to publicise alternatives, I have now decided to close that investigation."

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