BT poised to strike back

When all around they have been saying their free service is the cheapest, BT has been sitting on the sidelines, talking about quality. For BT, the snag with using price as a key marketing tool is this: the regulator. While competitors offer free services, and slash prices, the regulator has forbidden BT to follow suit. Some would argue this was necessary, to help counteract the legacy of its former monopolistic power. Although many staff at BT have described it as living under the tyranny of regulation, and to them, it has felt like a straight jacket, with the company unable to implement the bolder ideas discussed internally.

But from tomorrow, the former state controlled telecom power will be freed of Ofcom’s shackles and able to compete on price.

BT slashing prices, that’s good news for the public isn’t? Well maybe, but some fear, the company will reduce the cost of calls, but up line rental, effectively funding price cuts by charging more to the basic user, often on a low income.

You can imagine the headlines: ‘BT takes from the poor, to give to the rich.’

In practice, however, price competition with line retail is just as fierce, and BT has pledged to minimise the increase in the cost of its basic service.

But, in the broadband prices wars the handcuffs are still on. Ofcom is still maintaining restrictions on BT’s broadband pricing, forcing it to remain a bystander in the battle to offer free fast Internet access. [...]

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