BT agrees to limits on private circuit prices

BT is to limit overall price increases for its private circuits to the retail price index under a new deal hammered out with the telecommunications regulator, Oftel. Private circuits are those where customers have their own dedicated networks.

The agreement maintains the basic cap but removes the flexibility that has allowed BT to impose price rises of up to 30 per cent on some private circuit customers.

In the past BT could move individual private circuit prices at will as long as it kept to an overall price inflation-linked cap. The company said that it needed to do this to reflect costs. But customers, particularly those using analogue circuits, have complained of the effects of volatility and unpredictability in BT's prices.

Bill Wigglesworth, the acting director-general of Oftel, said that prices would be capped to the rate of inflation on three baskets of private circuits - national analogue, national digital and international circuits. Within each basket, individual services would be capped to inflation plus 1 or 2 percentage points.

BT said that past price jumps were deemed necessary as some circuits were more expensive to maintain. A spokesman for the company said: 'The Oftel decision is obviously a challenge, but we enjoy a challenge.' However, the agreement is likely to anger some customers who wanted a much more onerous price cap.

BT has been complaining of increasingly tight regulation by the watchdog, which, it alleges, is interfering in the day-to-day running of the business.

The company's overall pricing regime is also due to be changed in July. The new cap on a basket of basic services will be inflation minus 7.5 percentage points, compared with the retail price index minus 6.25 under the existing regime.