BT cuts business call costs

BT has cut its telephone charges to business by between 6 and 10 per cent as part of its commitment to Oftel, the telecoms regulator, to lower its prices to customers. The move means companies will pay a total of pounds 220m a year less on their phone bills.

The reduced charges, unveiled yesterday, will be offered even to low- volume business users with quarterly bills of just pounds 10 a quarter.

The new discounts are in addition to cuts of more than pounds 1.1bn over three years, shared equally between residential and business customers, BT said.

The Telecommunications Users' Association welcomed the cuts, although it repeated its long-standing call for a reduction in the standard call charge.

"We always welcome improved pricing for telecom users and we particularly welcome the BT intention automatically to register the low volume user," Bill Mieran, TUA chairman, said.

Yesterday's announcement of further price cuts had been expected, and analysts said the effect on BT's earnings was fully reflected in BT's share price. Indeed, the shares closed ahead 51/2p at 340p.

About half of the pounds 220m in lower charges has been brought forward from next year's Price Control benefit, with the agreement of Oftel. A BT spokesman said yesterday that a further pounds 300-400m of savings would be introduced by August of next year, in line with undertakings agreed with the telecoms regulator.

For the first time, low volume users will be automatically registered for the new savings scheme, at a cost of 99p a quarter. In the past, businesses have complained that they were unaware of discount schemes, and found it difficult to judge the best plan to use.

With the latest changes, virtually every call made by UK businesses will be eligible for some form of discount on BT's standard rate. Its business rates will be even lower if used with the company's ''key numbers'' feature, which allows customers to nominate 10 numbers on which an additional 5 per cent discount is applied.

All told, business discounts of up to 36 per cent off standard rates are now available to certain business customers, according to BT.

These latest cuts by BT follow changes to its ''Friends & Family'' scheme, introduced in April, which saw the abolition of the pounds 4.99 joining fee and a doubling of the discount to 10 per cent.

BT said yesterday that 1.5 million residential customers had joined the programme since March.

Cable operators, which compete directly with BT for telephony customers, gave a mixed reaction to the announcement.

"It was not unexpected, and we continue to offer very competitive rates compared to those of BT," said an executive at a leading operator.

But some cable companies are concerned that deep discounts by BT will make it increasingly difficult for them to undercut the dominant operator.

BT has been losing customers at the rate of about 50,000 a month to competing suppliers. The introduction of number portability over the next year is expected to increase the number of customers switching to lower-cost telecoms companies.