BT freezes phone call charges but raises line rentals

BRITISH Telecom is to freeze charges for all direct dialled calls for at least a year. Against that the cost of renting a telephone line will rise by pounds 1.26 to pounds 22.96 a quarter from January.

BT is also offering special discounts and tariff packages which mean many customers will see their bills go down depending on how much they use the telephone.

However Oftel, the industry watchdog, said that the changes announced yesterday would mean a 2.4 per cent increase in the typical residential bill. Bill Wigglesworth, the acting director general of Oftel, warned that BT would have to do much more to meet its price controls for the current year. At present, BT has to keep the overall price increase on its basket of basic services to inflation minus 6.25 percentage points, but can vary price changes for different services and tariff options within that umbrella.

The main changes include a blanket freeze on all direct dialled calls, national and international. The prices of some calls to North America have also been cut.

Customers running up a quarterly bill of over pounds 75 will get an automatic 5 per cent discount on calls made in excess of that amount with greater discounts as the number of calls rises.

BT is also offering residential customers a 10 per cent discount on all direct dialled calls in return for a pounds 4 quarterly fee. Previously the discount was 5 per cent, although it increased as the number of calls made rose.

In an effort to fend off competition from Mercury and the cable television companies, BT is introducing a stream of temporary special offers starting with the current 'Sunday Special'. Under this scheme, which runs until 27 December, direct dialled local and national calls made between 3pm and midnight on Sunday are charged at the local cheap rate.

Michael Hepher, BT's group managing director, said that it was impossible to give an idea of what customers will save because it all depends on how much they use the telephone. He said that more specials will be offered throughout the year, starting in January, with reductions of up to 23 per cent on cheap rate calls to the European Community. The Supportline service, which offers half price rental and some free calls to the elderly and others who need to make very few calls, will also be doubled to cover five million people.

Vivienne Peters, the director of the Telecommunications Users Association, said that the changes were much better than expected although she believed that at least five or six million of BT's 20 million customers would still face larger bills. 'BT has been forced at last to listen to its customers . . . because there will be very real competition within a few years.'

Mercury, BT's rival, also announced better tariff packages yesterday for those who use the telephone a lot, including discounts of 20 per cent in return for a pounds 5 quarterly fee. Mercury claims that already the average residential customer using its service instead of BT can achieve an overall saving of up to 35 per cent.

At the same time, BT is introducing improved call tariff packages for business customers which have traditionally benefited more from price changes. There will also be price freezes and reductions on digital private circuits.