Ofcom removes retail price controls

ofcom | press release | 19|07|06
Ofcom removes retail price controls on BT line rental and calls


Today, 22 years after retail price controls were first imposed to limit increases in the price of line rental and calls for BT customers, Ofcom announced their removal.

This significant deregulation follows both the conclusion of Ofcom’s Strategic Review of Telecommunications in September 2005 and a specific public consultation on the removal of retail price controls begun in March 2006.

The removal of retail price controls is enabled by – and reflects – the rapid growth of competition and continued reductions in the cost of phone services for customers. More than 10.7 million households and small businesses now use providers other than BT Group plc for their phone calls – including more than 4.6 million cable customers – and the UK has some of the cheapest phone costs in the world.

This pattern of increasing competition and falling prices is likely to gather pace in the future as new technologies enter the mass market, such as Voice over IP (VoIP) phone calls over the internet, already actively used by more than 500,000 UK households and small businesses. A number of companies have also developed unbundled local loop services which offer phone calls, high-speed broadband, television over broadband and video-on-demand over their customers’ existing phone lines. To date, more than 600,000 local loops have been unbundled, a total increasing by almost 100,000 a month with a further acceleration in predicted demand in the near term.

Fixed line providers also face growing competition from the mobile sector. Mobile phone usage is growing as consumers increasingly turn to mobiles rather than landline phones for many of their daily calls. Mobile phones now account for 31% of all voice call minutes in the UK, up from 20% in 2001 and 5% in 1996.

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