Watchdog to remove price controls that have been in place for over 20 years

When teaching a kid how to ride a bike or swim, there's a point when a parent is confident enough to gingerly remove the stabilizers from the wheels or deflate the water wings. Similarly, U.K. telecoms watchdog Ofcom feels BT Group is self-disciplined enough to remove price controls that have been in place for over 20 years.

"Ofcom believes it is now appropriate to consider allowing existing retail price controls to lapse as increasingly effective competition between providers continues to drive down costs to consumers," the regulator said. The changes, which are expected to take place on August 1, will end over twenty years of controls on BT prices.

Ofcom, which explained that BT no longer had near-monopoly it once enjoyed, said almost a third of calls today were made from mobile phones and that increasing numbers were turning to Voice-over-Internet-Protocol computer telephony, which is much cheaper. The watchdog, added that average call charges have fallen by more than 50% since 1996 as competition and new technology has grown. Hence all phone companies, including BT, should be free to set their own prices and compete for customers come summertime.

Though media reports have speculated that consumers will face larger bills once the shackles are removed, Bernardus "Ben" Verwaayen's BT believes there should now be enough competition in the mix to keep costs low. "BT welcomes this consultation as further evidence of the highly competitive market in the U.K.," said Gaby Heppner-Logan, BT's director of regulatory affairs, in a statement. " Residential call charges in the U.K. are already amongst the lowest in the world. BT has already saved its customers more than £1 billion ($1.75 billion) over the past decade and this trend looks set to continue. We look forward to responding formally to Ofcom in due course."