Ofcom, the UK telecommunications regulator, has removed price controls on BT. Price controls were first placed on BT when it was privatised in 1984. At the time, BT had a total monopoly on the UK market and price controls were in place to prevent BT from over charging. Since then, intense competition has developed in the market. BT’s many competitors were significantly more competitive than BT and BT was powerless to react. The price controls were seen as a way to allow competition to flourish but preventing BT from using its dominant position to undercut the competition. Now that competition is rife, there is no need for Ofcom to control the prices that BT can charge.
As a response to the lifting of price controls, BT has announced the following reductions in its prices:
- BT Together Option 2 - reduced by 28% to £3.95 per month
- BT Together Option 3 - reduced by 31% to £9.95 per month
- From 15th August - free evening and weekend calls to anyone signing a 18 month contract
- Oct 2006 - calls to 0845 and 0870 reduced. Reduced rates to mobiles
- End of 2006 - 25p off line rental if you receive your bills online
- Voice over Internet - reduced by 29% to £4.95
This news certainly is good news to BT customers. Non-BT customers will also benefits as competitors will be forced to react by dropping their prices.