New rules could make US calls cheaper

THE GOVERNMENT has relaxed rules on telephone services to the United States, paving the way for more competition and lower call charges, writes Mary Fagan.

Companies will be able to offer a full two-way telephone service by leasing capacity in bulk from BT and Mercury and selling it on to customers.

This so-called international simple resale is already allowed between Britain and Australia, Canada and Sweden. American companies including ACC and Worldcom and Sweden's Telia are among those taking advantage of the new rules. Savings for customers depend on the method of charging but in some cases it is thought that people can save up to 30 per cent compared with using BT.

Michael Heseltine, the President of the Board of Trade, said: 'International simple resale will allow new competitors to offer international telephone services on one of the busiest telephone routes in the world.

'This new competition will put pressure on the prices currently charged for international calls to and from the US, bringing down the cost of telecommunications for both businesses and individuals.'

Analysts said Mercury might suffer more than BT, as a higher percentage of its revenue comes from calls to the US. However, James Ross, chief executive of Cable & Wireless, Mercury's parent, said: 'We are a unique worldwide federation of companies which will also derive advantage from this move.'