The proposals would allow BT to set its own prices for the first
time in 22 years.
According to
Ofcom, new technology and the growth of competition have
transformed phone services over the last 10 years. Average
call prices have fallen by more than 50% since 1996, while more
than 10 million households now use providers other than BT for
their phone calls.
New technology has had an impact. According to Ofcom, industry
estimates suggest that there are now more than 500,000 active Voice
over Internet Protocol (VoIP) users in the UK. VoIP services offer
a significantly lower-cost alternative to traditional fixed-line
calls.
Mobile phone use is still increasing, with 31% of all UK voice
call minutes originating from mobile phones rather than from
fixed-lines in the period between July and September 2005. There
has also been considerable competitive local access investment,
says Ofcom.
The watchdog believes that the time is right to consider
allowing retail price controls to lapse.
But Ofcom will not release control entirely: its proposals
include important protections for vulnerable groups as well as
specific pricing assurances from BT on key services including line
rental. These assurances would remain in place until the end of
2007 and would be in addition to existing statutory requirements
from BT under its Universal Service obligations.
Ofcom plans to carry out a review of the retail market in 2007,
in order to assess the impact of deregulation.
