22 March 2006
Should proposals to deregulate price controls on BT's line rental and calls be accepted, the direction that the company's pricing policy would take is "unclear", according to uSwitch.com.
The price comparison and switching website said that there were "many possibilities" as to how the company would react to being able to set its own prices, but outlined some of the effects of a price cut by BT.
"It is unclear how BT will structure their prices, but if they drop, it will inevitably spark intense competition in the home phone market, with BT's existing 12.9 million customers benefiting from lower prices," explained Blair Wadman, telecoms expert at uSwitch.com.
"If the company slashes prices to entice those two million consumers who switched away in 2005, this would certainly see the five major home telephony companies in the UK engage in a price war in an attempt to gain additional market share. Increased competition would in turn lead to falling prices and greater choice for consumers.
"However, if prices significantly decrease, smaller providers would struggle to compete, which might lead to further market consolidation."
He added: "There are many possibilities as to what BT may do. It would, no doubt, be hugely unpopular with consumers if BT increased its prices in favour of profitability and greater shareholder returns. We wait with anticipation to see the results of the public consultation."
Use the uSwitch.com comparison and switching service to find the lowest cost for your calls and line rental