Oftel orders BT to raise chargecard price

Don Cruickshank, the telecommunications regulator, yesterday used his new competition powers for the first time by ordering British Telecom to raise the price of its popular chargecard service.

The ruling came on the same day that BT revealed increases in chargecard call prices, a move it insisted was pre-planned. But Oftel, the watchdog, warned the action may not be enough.

Almost 15 million customers have chargecards, which allow them to charge calls made from payphones and other handsets to their home or office bill. BT has 92 per cent of the market while its nearest competitor, Mercury, has just 7 per cent.

Oftel said it had acted after competitors complained BT's chargecard revenues did not cover costs. The group charges an average of 11p a minute for calls.

"The low retail prices set by BT mean other operators cannot compete on equal price terms in offering chargecard services, especially to residential customers," Mr Cruickshank said.

BT admitted it was losing money on the chargecard and said that from 7 August it would introduce a single 20p-a-minute rate for all inland calls, a move which had no connection with Oftel's announcement.

A spokesman said: "This is a bit silly because we were already doing this anyway and Oftel was aware of that. We are surprised and a bit disappointed."

But Oftel said its order still stood. "We're not sure the new prices meet our concerns either. The onus is now on BT to prove they're not anti- competitive."

Mr Cruickshank won the fair trading condition, which gives him the power to ban any behaviour he believes is anti-competitive, after beating off a High Court challenge by BT last year.