Oftel admits Thursday that BT's prices are too high and that the telecoms market is still not competitive as it confirms it will maintain price controls on the telco.
The price controls were due to be dropped in August but Oftel concedes that more needs to be done as BT still dominates the residential telephony market. More than 80 percent of telephone calls still pass through BT's lines. The decision will mean the telco has to keep any price rises 4.5 percent below inflation. Oftel anticipates the controls will save consumers a total of £270m. The controls will affect both voice and data calls.
The telecoms regulator admits it has been forced to maintain the controls because BT still dominates the market. "BT's prices are still too high," says an Oftel spokeswoman. "The market is still not competitive."
The decision will come as a bitter blow to BT which had hoped the controls would be scrapped. "We are disappointed that Oftel hasn't accepted that there is enough competition in the residential market. We feel there is sufficient competition," says a BT spokesman.
He denies that BT's ownership of more than 80 percent of telephone lines constitutes a monopoly. "You can't take it on the crude basis of the number of lines. This is distorted by the fact that 50 percent of the country is passed by cable and the penetration of mobiles means everyone has a choice about every call that they make."
BT also denies its prices are too high. According to a survey commissioned by the telco and published Thursday it is the cheapest in the UK. "It showed that our prices are lower than ntl and all our major competitors," says the spokesman. He is struggling to understand Oftel's logic. "Are we pushing prices below cost?" he asks.
Oftel has also raised concerns about the price of broadband services. In a survey published this week UK broadband prices were among the highest in Europe.
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