A FIERCE price war in the landline calls market could be triggered by a proposal from the regulator to eliminate price controls that are imposed on BT.

Plans by Ofcom to let BT compete for customers on an equal level with rivals from August could allow the telecoms giant to cut prices in a move to win back customers who have switched away from it.

Under the proposals, BT could seek either to undercut rivals or push up its line rental and call costs. It would also be allowed to offer a bundled package of services like those offered by rivals such as NTL and Wanadoo Although BT said yesterday only that it would “respond formally . . . in due course” to Ofcom’s proposals, Ian Livingston, head of BT’s retail division, has said already that he plans to offer more “tailored packages” to consumers if the group is released from retail price controls.

Blair Wadman, telecoms analyst at USwitch, the price comparison service, said: “If BT slashes prices, this would certainly see the five major home telephony companies in the UK engage in a price war in an attempt to gain market share.”

Oftel, then the regulator, first imposed controls on BT that restricted its ability to move call and line rental prices either up or down at its privatisation 22 years ago in a move to bring down prices for consumers.

Since then, new entrants have flooded the domestic calls market. New technologies, such as voice-over-internet, and services such as wholesale line rental have also put the heat on BT, prompting the regulator to consider allowing the existing retail price controls to lapse.

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