British Gas takes on BT in telecoms market

The UK's dominant gas supplier, British Gas, takes on BT Monday as it offers a cut-price telephone service to compete with the telco.

In a bold first step, British Gas claims users will save up to 33 percent on local calls, 50 percent on national calls and up to 75 percent on international calls. It claims the move is the first step towards a more competitive telecoms market.

The new telco will also be offering Internet access, but will avoid unmetered access for the time being. "We are not currently offering unmetered but we are keeping an eye on it. It will depend on how BT changes its charges," says a British Gas spokesman.

Marketing director of British Gas, Ian El-Mokadem believes there is a long way to go before the telecoms market is as open as the energy market in the UK. According to research conducted by energy watchdog Ofgem, after two years of competition in the energy market nearly 100 percent of consumers are aware of the option to change suppliers. This contrasts unfavourably with the telecoms market says El-Mokadem.

"Nearly 8 million households in the UK don't realise they have a choice of phone supplier," he says. BT -- privatised in 1984 -- still owns around 85 percent of local phone lines.

Research published Monday by telecoms consultants Analysys is optimistic about the future of telecoms competition and claims the entry of big players with established brands will cause a big shake-up in the market. "It seems very likely that the UK home communications market is entering a period of significantly accelerated change," the report concludes.

BT disputes the savings British Gas claims customers will make and says it is "not afraid of competition". "British Gas is making some strange claims about possible savings," says a BT spokesman. "Sure, the figures are right if you base them against our standard charges but we have six and a half million users on BT together and they pay around the same that British Gas is offering," he says.

Customers wishing to swap to British Gas' service will not need to change phone, phone lines or phone number. The company will install a free-of-charge "Saver Socket" which is plugged in between the phone and phone socket. All calls, whether fixed, mobile or Internet, will be billed on a British Gas telecoms bill.

British Gas hopes to attract one million subscribers by the end of 2001. The service goes live in mid-October and anyone registering before the end of September will receive a credit of 1,000 free minutes.

Tony Westbrook reckons that when something seems too good to be true, experience suggests that it usually is. As it was with the recent rash of completely free internet access offerings. One of the culprits for scuppering the free services must be BT who is sticking firmly to its June 2001 date for unbundling the local loop -- the last possible date by which it has to do it. Go to AnchorDesk UK for the news comment.

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