This piece first appeared in The Daily Telegraph on 11 September 1999
The text here may not be identical to the published text

These new cuts in BT's phone tariffs sound great. An hour of free calls each month. And the cost of phoning long-distance cut by half. I suppose the changes are because it's making so much money it wants to give some back?

Well, BT did make profits of nearly £4.3 billion in the year to the end of March. But that isn't why it's giving customers cheaper calls.

No? I suppose it's because there is so much competition out there now.

No. BT has only lost 16pc of the domestic market despite 13 years of competition. For one reason or another most people stick with BT even though it is usually the most expensive phone service - it can be cheaper to use a mobile phone than BT.

So why is it cutting call charges?

Two reasons. First it has to. Oftel, the telecoms regulator, gives BT a licence to operate and one of the conditions is that BT cuts its charges every year. This year it has to cut charges to customers costs by £89 million. The changes which start from October 1 meet about 60pc of those cuts - so there will be more 'good news' from BT later in the year. Second, it is introducing a new discount scheme from November 1 - on top of the 13 it already offers. That will make it more complicated to work out which tariff is cheapest. By confusing people it can charge them more while they think they're saving money. And it makes it harder to make fair comparisons with its competitors.

But the three hours of free local calls each quarter - that sounds simple. And good if you use the internet a lot.

Not really. You get £1.80 worth of free calls each quarter - at 1p a minute that works out at three hours of local calls at the weekend - but just 22 minutes long-distance in the daytime. But the quarterly rental is going up by a £1. So you save 80p. That will buy you just 80 minutes on-line at weekends spread over 13 weeks. That works out at well under a minute on line every day. And as there is a minimum charge of 5p for a phone call, the only way of doing it is to log on for five minutes a day for sixteen weekend days. That hardly qualifies you for an anorak. From 1 November some people who use the internet a lot at the weekends will end up spending more. At the moment, you can get 15pc off all your internet calls by paying £6 a month for Premierline. So the cost of a weekend call can be as low as 0.68p a minute (15pc Premierline discount plus the 20pc discount if you nominate your internet line as your Best Friend under Friends and Family). From November BT wants you to change to its new service called BT Together. For that you pay an extra £9.20 a quarter on top of the current line rental but you get no discount on local calls. So even with Friends and Family, the charge per minute will be 0.8p a rise of 17.6pc in your weekend, internet call costs.

Hang on. I thought the changes were happening on October 1?

Concentrate. I told you, another change starts on November 1. BT wants to replace four existing discount schemes with one - BT Together. It will cost £11.99 a month (£35.97 a quarter) and you will get 50pc off the rate of national calls, 25pc off local daytime calls and 33pc off local evening calls. In addition you will get £5.60 worth of free calls each quarter.

Will other call charges be cut, like phoning abroad?

Depends where. Call charges to the United States of America, France and Australia are being cut - at least at some times of day - by up to 50pc. But many others are not. And if you do not know the number, then you will have to pay the new increased charges to international directory enquiries. Instead of a flat 80p it will cost from £1.10 to £4.40 depending on how long the call takes - a rise of up to 450pc. That's equivalent to a three-quarters of an hour weekend chat with someone in new York. The change starts on October 1 - BT didn't mention it last week because it had already been announced in June.

And will calls to mobiles be less?

Slightly. About a penny a minute off in the week and about a halfpenny at the weekend But they can still cost as much as 25p a minute or as little as 2p depending on the network. Calls to Cellnet numbers, which BT owns, are the cheapest.

Damn. I had a Cellnet but changed to One 2 One but I kept the same number.

Never mind. As long as your number was originally a Cellnet number, calls are charged at the Cellnet rate.

And what about Friends and Family - will that still stay?

Yes. All the existing discount schemes will stay - but most of them will not be available if you choose BT Together. However, Friends and Family can be combined with BT Together so calls to your ten nominated numbers will qualify for a 10pc discount - and your best friend will qualify for a 20pc discount. BT says this "radical new pricing deal moves away from complex discount schemes and introduces clear, simple, low prices."

11 September 1999

e-mail Paul Lewis on paul@paullewis.co.uk