British Telecom’s (BT) decision to cut prices for residential pho...

July, existing standard-rate customers will shift to Option 1, paying 3 pence per min. for daytime calls and 5.5p for up to an hour per call in the evening and on weekends, instead of up to 60p for local calls at the old rate, BT said. Line rental charges will drop from Pounds 11.50 per month to Pounds 10.50 for customers. The primary reason for the change was to allow customers to make fair comparisons with rivals’ rates, a BT spokesman said. Many ads over the past year have contrasted BT’s standard rates to others’ lower prices, the spokesman said. Ads will now have to compare “apples with apples,” he said. But alternative operators in the residential arena, which at first failed to grasp the significance of higher line rental rates, awoke to it over the weekend, said Gamma Telecom Managing Dir. Kevin Jauncey. Jauncey, who’s appearing on a panel today (Tues.) on indirect access issues at the European Competitive Telecoms Assn. annual conference in Monte Carlo, said the discussion was modified slightly to address BT’s action. “It wasn’t seen straightaway what the implication was,” he said, but operators are now saying the rise in line rental charges to their customers (from Pounds 9.50 to Pounds 10.50 per month) will hurt competition. In the residential market, all alternative operators rely on BT for the “last mile,” Jauncey told us. A Pounds 1-per-month rise in line rental fees means customers pay not only their telcos’ charges but also an additional Pounds 12 per year to BT, making their phone rates less attractive. At the moment there’s not much BT competitors can do, Jauncey said. The U.K. Office of Communications (Ofcom) is reportedly deciding whether to investigate the new tariffs. But the BT spokesman said line rental has never covered its costs and is being subsidized by phone calls. As far as BT knows, he said, Ofcom would allow not only this rise but an even higher one because line rental must as nearly as possible pay its costs. BT rival Telewest said: “Consumers can only benefit from increased competition and we're used to maintaining pressure on other providers, forcing reactionary moves like this.” Telewest urged existing BT customers “who feel they've been paying over the odds for their phone service” to call the competitor. “If they take one of our unlimited packages, we'll also give them either a year’s free digital TV or a year’s free unlimited dial-up Internet access,” Telewest said.