BT cuts cost of weekend calls

BRITISH TELECOM has launched a price war in the telephone market by cutting the cost of weekend calls by up to 60 per cent. From 4 December, a three-minute weekend call made to anywhere in the country will cost 10p. Calls lasting half an hour will cost less than pounds 1.

The cuts, which are permanent, are part of price reductions totalling pounds 500m which BT must make this year to comply with its regulatory price cap.

BT is also concerned by the rate at which it is losing residential customers to cable television companies which offer local telephone services and to Mercury Communications.

The cable companies are thought to be winning about 17,000 households a month while Mercury is taking on another 30,000. Some cable companies already offer free or flat- rate local calls at offpeak times, as long as the calls are not routed outside the local cable network and do not have to use cable or equipment owned by Mercury or BT.

BT said the weekend deal would save people about pounds 125m of which 80 per cent would benefit domestic customers rather than businesses. It plans more schemes including a 'family and friends' option, allowing discounts on regularly called numbers nominated by customers.

Other plans include enhancements to Option 15, which gives residential customers a discount on call charges of up to 10 per cent in return for an upfront pounds 4 quarterly charge. The company said it would also improve its scheme for people who use the telephone least but need it as a lifeline.

Michael Hepher, BT's group managing director, said: 'This is real money in your pocket, not idle chatter.'

However Oftel, the telecommunications watchdog, has called for a faster introduction of the full price cuts it requires this year. Under the current control formula, BT must keep the overall price increase on its 'basket' of basic services to inflation minus 7.5 per cent.

BT's move is expected to push Mercury into further price reductions.