Talk is cheap, and getting cheaper

Cut-price phone services are giving BT a run for its money - to everyone's benefit. Steve Lodge reports

Phone calls are getting even cheaper. Last week BT cut the cost of non-local daytime calls by as much as 10 per cent to under 8p a minute, and a number of competitors have followed with their own price cuts in a bid to continue to attract custom away from BT.

For many people never at home on weekdays the BT price reductions will not make a lot of difference - the cost of national calls at the weekend, just over 3p a minute, and in the evening is not changing. But the cuts should be seen as a reminder of the continuing competition for residential phone users and the fact that for a little effort additional savings are available.

Everyone who makes BT calls should ensure they are signed up for the company's free Friends & Family service, which has been improved recently to give a 10 per cent discount on calls to 10 different numbers, including one international and one mobile. Furthermore the discounts now take effect within a few days of informing BT of your chosen numbers - rather than, as previously, from your next bill - and can be changed as often as you want. Despite BT promoting this free service extensively, millions of people are still not signed up. Call 0800 400 496.

BT also offers a service giving an additional 15 per cent discount on calls to pretty much any number (calls to mobile phones are one exception: that discount is just 5 per cent) but this costs an extra pounds 6 a quarter. Subscribers to this PremierLine service can also add five more international numbers to their Friends & Family discounted numbers.

Clearly, to benefit from PremierLine you need to make sufficient calls to cover the pounds 6 quarterly charge: BT says the service is designed to benefit people making pounds 45 or more of calls every quarter. But there are also other companies offering cut-price national and international calls (but not local) which use your existing BT phone and which do not carry subscription charges or other potential catches of any importance. To access the discounts you simply add a prefix to the numbers that you call.

First Telecom (0800 376 6666), for example, charges just under 6p a minute for daytime UK calls and 3.5p in the evenings, which compares with BT's 8p daytime rate, 4p for regional evening calls and 4.7p for long- distance UK calls. First Telecom's international call rates are also typically 20 per cent cheaper than BT. There are no other charges and the only "catch" is in effect having to pay for calls upfront by having money on account. An account can be opened with as little as pounds 10 by credit card. At weekends, however, it is worth noting that First Telecom's rate for national calls is 3p a minute, which is barely cheaper than BT's undiscounted rate.

Other companies such as ACC (0800 980 1601) will bill you monthly rather than charge upfront. ACC is potentially even cheaper for many national UK calls. It charges 5.8p a minute during the day, 2.6p in the evenings and just 2p at the weekend, although it does have a flat 3p call connection charge on top, which will make the shortest calls more expensive than BT. Its international rates are not as keen as First Telecom's, either.

There is nothing stopping people from signing up with more than one service; Swiftcall (0800 769 0000) is probably about the cheapest international operator of its kind around but it does not offer cheap national calls.

More well-known telecoms companies such as Mercury (0500 500 194) and AT&T (0800 143 143) also advertise calls cheaper than BT, and cable companies claim across-the-board savings, including local calls. But here you get into the realm of more difficult cost comparisons - what Profundus Consulting, a firm of telecoms advisers in Reading, Berkshire, calls "confusion marketing", due to a range of different charges and deals.

Both Mercury and AT&T, for example, carry subscription charges, so, as with BT PremierLine, to get the benefit of cheap call rates you need to know you will be using your phone a certain amount; they also have flat-rate call connection charges on top of their time-related call rates, so increasing quoted rates for short calls. That said, AT&T is currently running a promotion through this newspaper offering readers pounds 20 of free calls and no subscription charge for the first quarter, which is worth a look.

Most cable companies will have a connection charge as well as subscription charges, which will eat into call-charge savings. But with BT disconnecting lines when properties become empty, people who are moving home might use the opportunity to consider cable. Call the National Cable Information line (0990 111 777).