BT's deal on 'free' local calls receives guarded response

British Telecom will introduce a US-style "unmetered local call" package in December, caving in at last to the pressures of public demand and increased competition for residential business.

British Telecom will introduce a US-style "unmetered local call" package in December, caving in at last to the pressures of public demand and increased competition for residential business.

Consumer groups reacted with caution, saying that the offer would have to be viewed in the context of the corporation's plan to increase line rental charges by 8 per cent, from £9.25 per month to £9.99.

The "unmetered" package will apply only to voice calls to local numbers and will specifically exclude internet calls. It will be available only in the evenings and at weekends.

Customers will be able to make as many calls as they like, though the length of a call will be limited to an hour, after which they will be charged. A voice phone call, on average, lasts for four minutes; by contrast, BT has found, an internet call lasts an average of 15 minutes even on paid connections. The company is to seek approval from Oftel, the telecoms watchdog, to introduce the service on 1 December.

Reactions were guarded. A spokesman for the Consumers' Association said: "It's fine if you're a heavy phone user. But it might be rather different if you don't use the phone that much. The line rental is important. We would like to see what Oftel's reaction will be."

As the company said it was on the verge of submitting its scheme, called "BT Talk Together", for approval, a rival was offering telephone calls for 25 per cent less than some of BT's charges. Vodafone will offer the service with the company Atlantic Telecom.

BT admitted yesterday that it had been drawing up the plans for the new service for some months. It had previously denied it, even when the news website The Register revealed the propposals.

The Talk service will be offered as part of BT's "Together" pricing plan. It will cost £14.99 a month, with monthly line rental increasing from £9.25 to £9.99.

Earlier this year, BT began offering its "Surftime" product - unmetered access to certain internet service providers. BT will offer a combined "Surf and Talk" package for £17.99 a month, a discount on the separate costs of the products. "We have been considering this for a long time,"a BT spokesman said."We are just waiting to finalise the regulatory approval from Oftel; we haven't gone through the prices with them."

BT is under increasing pressure from rivals that offer lower prices on calls, often with free internet access thrown in. It also has a huge debt, which the City is uneasy about. Earlier this year, BT reorganised itself into smaller operating divisions to try to react faster to the telecoms market.

Oftel requires a minimum of 28 days to consider a new package from BT, and said yesterday that it had not yet seen a formal proposal from the company. However, BT is pushing ahead with the plans and intends to submit them to Oftel this month.

Challenged on why the Talk Together service had not been offered at the same time as Surftime, a BT spokesman said: "We were under intense pressure to provide an unmetered internet access package earlier this year, and we did. We can only do so many things at one time." There was less demand for unmetered voice calls than for unmetered internet calls, the spokesman said.