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Ofcom Consultation: Deregulation of BT prices (Read 39,352 times)
Dave
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Ofcom Consultation: Deregulation of BT prices
Apr 15th, 2006 at 12:34am
 
Ofcom have published another consultation proposing to deregulate BT retail phone cost controls.

Quote:
Ofcom proposal to deregulate BT retail phone cost controls

22 years after price controls were first imposed when the UK telecoms market was liberalised, Ofcom is today publishing proposals to deregulate retail price controls on BT line rental and calls.

Under the proposals – which are subject to public consultation – all phone companies, including BT Group plc, would be free to set their own prices and compete for customers in future. The changes would take effect from 1 August 2006.

New technology and the growth of competition have transformed phone services over the last ten years; average call prices have fallen by more than 50% since 1996. Key developments in the market include:

    * Competing providers: more than 10 million households use providers other than BT for their phone calls, including more than 4 million households on cable networks [source: Ofcom Communications Market Report February 2006]
    * New technology: Industry estimates suggest that there are now more than 500,000 active Voice over Internet Protocol (VoIP) users in the UK. VoIP services offer a significantly lower-cost alternative to traditional fixed-line calls. As more than 10 million households now benefit from broadband connections, VoIP services are likely to grow rapidly over time.
    * Competitive local access investment: Local Loop Unbundling enables a range of providers to offer customers voice, broadband and video services over existing phone lines. By February 2006 the number of lines unbundled exceeded 300,000.

Given this, 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. These developments are also taking place against a background of continued growth in the market for mobile services. 31% of all UK voice call minutes originated from mobile phones rather than from fixed-lines, from July to September 2005. [source: Ofcom Communications Market Report February 2006.]

The proposals include important protections for vulnerable groups as well as specific pricing assurances from BT on key services including line rental. These assurances would remain in place until the end of 2007 and would be in addition to existing statutory requirements from BT under its Universal Service obligations.

More details here.

With providers putting prices up over the last couple of years, what reassurances do we have that they won't do so in the future? Is Ofcom really living in a dream world?  Roll Eyes

It says "average call prices have fallen by more than 50% since 1996." Perhaps that statement should have a '*' by it and a little note saying "Excludes calls to 0845 and 0870 numbers."  Grin

It also fails to mention changes in line rental and its associated services. For those that were on BT Standard (see here), their line rental has effectively risen by 50%.
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« Last Edit: May 31st, 2006 at 8:14pm by Dave »  
 
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Re: Deregulation of BT phone cost controls
Reply #1 - Apr 16th, 2006 at 10:52pm
 
Dave wrote on Apr 15th, 2006 at 12:34am:
Is Ofcom really living in a dream world?


No More like A Nightmare on Elm Street world where Stephen "Freddy Kruger" Carter pretends all is well and beautiful in the telecoms world to dull and unsuspecting government ministers and telecoms punters whilst secretly make the vilest and most unspeakable plans to allow most ordinary customer calls to uk businesses to be converted into nightmarisly expensive hidden premium rate calls that he and his former henchmen (fellow directors at NTL) will not count in their basket of typical telecoms prices that they claim consumers are now paying. Shocked Angry Angry Angry
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Re: Deregulation of BT phone cost controls
Reply #2 - Apr 19th, 2006 at 5:55pm
 
So these changes could take effect within less than six months, but 0870 will have to wait at least another 18 months. Normally I would end such a statement with a shocked face (Shocked), but it has gone beyond this.  Cry

As gdh82 says, Ofcom are a total disgrace and apparently stand for everything that is wrong in this country. I have absolutely no faith in the telecommunications industry and regard it as just a rip-off. I would much sooner return to having only BT to supply a service, as at least you knew where you stood.

Now we have a whole plethora of outlets who consider their marketing a way of fooling the masses. Engineering a telecommunications network comes way down the list of priorities.

Free is a complete load of rubbish. I don't expect a business to give me anything for free, not least a telecoms company. I have just today received a 1 month's free support from Laptops Direct. To get support I must phone an 0870 number.  Roll Eyes

My MP has thus far decided to ignore me with respect to the Early Day Motion put before Parliament on 0870 numbers used in government departments.
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Re: Deregulation of BT phone cost controls
Reply #3 - May 25th, 2006 at 11:18am
 
Finally finished my response to the numbering consultation  Lips Sealed Smiley Undecided and feel like a drink or a lie down now!  As raised by kk and NGM recently, consultation fatigue is a real problem, not least because of our understandable concern that Ofcom will probably ignore us anyway  Angry

Having said that, I wanted to respond to the Deregulation of BT Cost Controls, but I realise the deadline is tight -
Tuesday 30 May 2006 !


On the positive side, this consultation is very small and focused compared to the renumbering consultation and actually should be fairly straightforward to respond.  Having said that I would be grateful of any tips or pointers others could offer  Wink

Quoting from the consultation document it seems that Ofcom's proposal to remove pricing regulation on BT line rental and calls for consumers centres of four options:

Quote:
We have considered a number of options we could go for when the current control comes to an end at the end of July. We have set these options out below.
·      Option 1 – no control for line rental and calls for residential customers.
·      Option 2 – continue with the existing controls.
·      Option 3 – a control only on BT’s basic price for line rental.
·      Option 4 – no controls from August 2006 but an agreement by BT to protect low spenders.
Our assessment
We think that option 4 is the best option. We believe that the promises BT have given, (taking account of the amount of competition) will protect low spenders, and that changes in regulation, technology and the market should make sure that prices will stay low. For people on low incomes and with special needs, there will be other protection.

We will review the situation in 2007. If competition has not developed enough or people have concerns over prices, we could consider reintroducing the price controls.
We believe that ending the control is a major and very positive change for the telecoms market in the UK. However, many people may not be aware of this change or what it means for them. For this reason, we plan to begin a public information campaign to raise consumer awareness about the change.


And that Ofcom are seeking our responses to just two questions:

Quote:
We are particularly interested in your answers to these questions. We also welcome any other comments you want to give.
A Do you think that there are other forms of regulation that we should consider?
B Do you agree with our conclusion, and the assessment on which that conclusion is based?

How to respond
Phone prices affect us all, so please tell us what you think of our proposals.
If you have any comments on the issues raised in this booklet, please e-mail your comments to geoff.brighton@ofcom.org.uk.


There's just 8 responses to this consultation so far:

http://www.ofcom.org.uk/consult/condocs/retail/responses/

I intend to come back with some questions/comments once I've recovered  Wink Grin Wink
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« Last Edit: May 25th, 2006 at 11:57am by gdh82 »  

There's more of us that them, stick together and challenge 0870/0845 etc etc
 
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #4 - May 25th, 2006 at 7:14pm
 
It seems to me that the concerns regarding deregulation are more to do with line rental than call costs.  Surely BT would not wish to increase there calls costs because they would lose customers to their competitors ?  Whereas further increases in their line rental (especially if hidden behind some call cost reductions) would be of concern, especially for people with a low usage/low income who would feel the increase disproportionately.

Given this then Option 3 – "a control only on BT’s basic price for line rental" sounds better than Ofcom's preferred Option 4.

Could I ask for some feedback on this ?
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There's more of us that them, stick together and challenge 0870/0845 etc etc
 
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #5 - May 25th, 2006 at 7:22pm
 
Ofcom's preferred option on this is Option 4 but having read the full document on the Options, it turns out that Ofcom want to remove the regulation surroundings things like call charges/line rental but keep the BT Light User Scheme and In Contact Plus.

They then state that they have agreed certain things with BT with regards to any increases in call charges/line rental but will not go into detail on what they have agreed with BT.  BT wish to keep it quiet/confidential and Ofcom have agreed.

So to put it another way, Ofcom would like us to choose option 4 and WE just hope to god that BT dont increase the price of their linerental/call charges and although Ofcom have some assurances from BT about price rises both BT and Ofcom refuse to go into detail.  This could mean that what Ofcom and BT have agreed together is that the linerental wont increase by £3 but we don't know.  On the other hand BT may have agreed not to increase it by no more than £1.

The whole point is that we don't have any idea on what has/hasn't been agreed but yet Ofcom would like us to choose option 4 and basically, from our point of view, we pray to god that what BT have agreed with Ofcom protects us consumers from yet another linerental increase or call charges increase.  So we should leave this in the hands of Ofcom despite not knowing what has been agreed.

Just some things that BT have increased:-

1.   Line rental on BT Together Option 1 from £10.50 to £11.00 per month
2.   Extension of daytime rate to start at 6am instead of 8am
3.   Minimum call charge from 5p to 5.5p (6p for business)
4.   Evening/weekend rate after 1 hour from 1p to 3p per minute
5.   Call charge to Speaking Clock 123 from 20p to 30p
6.   Minimum call charge on public payphones from 20p to 30p
7.   Introduction of £5 late payment charge
8.   Call charge to directory enquiries 118500 from 15p to 23p per minute plus 40p connection charge
9.   Ring back charge from 10p to 15p per use - chargeable even if not connected after 45 minutes trying
10. Introduction of call return fee of 6p for pressing 3 after 1471
11. Introduction of call return fee of 7.5p for pressing 0 after 1571
12. New installation connection fee increased from £75 to £125

Some of these increases weren't that long ago neither.

Now Ofcom would have us believe that the competitive pressure alone would mean that prices will go down but yet even before BT have their regulatory controls removed (well proposal to remove them), we can clearly see that prices have only gone up.

Where is the competitive pressure in that?  Shouldn't BT be thinking about being competitive and therefore avoiding increasing their prices?

One example is linerental.  BT increased their linerental by 50p to £11 and what did most of the competition do?  They of course just increased their line rental as well and Telewest even has a limit of 60minutes per call on their inclusive calls same as BT now whereas before it was unlimited.  Again is this being competitive?
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« Last Edit: May 25th, 2006 at 7:29pm by bbb_uk »  
 
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #6 - May 26th, 2006 at 9:18am
 
bbb_uk wrote on May 25th, 2006 at 7:22pm:
Just some things that BT have increased:-

1.   Line rental on BT Together Option 1 from £10.50 to £11.00 per month
2.   Extension of daytime rate to start at 6am instead of 8am
3.   Minimum call charge from 5p to 5.5p (6p for business)
4.   Evening/weekend rate after 1 hour from 1p to 3p per minute
5.   Call charge to Speaking Clock 123 from 20p to 30p
6.   Minimum call charge on public payphones from 20p to 30p
7.   Introduction of £5 late payment charge
8.   Call charge to directory enquiries 118500 from 15p to 23p per minute plus 40p connection charge
9.   Ring back charge from 10p to 15p per use - chargeable even if not connected after 45 minutes trying
10. Introduction of call return fee of 6p for pressing 3 after 1471
11. Introduction of call return fee of 7.5p for pressing 0 after 1571
12. New installation connection fee increased from £75 to £125

Some of these increases weren't that long ago neither.

Now Ofcom would have us believe that the competitive pressure alone would mean that prices will go down but yet even before BT have their regulatory controls removed (well proposal to remove them), we can clearly see that prices have only gone up.

One example is linerental.  BT increased their linerental by 50p to £11 and what did most of the competition do?  They of course just increased their line rental as well and Telewest even has a limit of 60minutes per call on their inclusive calls same as BT now whereas before it was unlimited.  Again is this being competitive?


Thanks bbb_uk.  Your post has highlighted to me the numerous ways in which BT can increase their prices other than the more obvious ppm of a call.

As you point out, the above increases have taken place under regulation - how does that work - are increases agreed with Ofcom first ?  Whereas if the matter was deregulated, would that mean in future  BT could increase prices as they see fit (without seeking Ofcom's agreeement) ?

So in terms of Ofcom's proposed options - would you like to see option 2 approved - continue with the existing controls ?

Finally you mentioned the BT Light User Scheme being retained.  I imagine this scheme has its positives but is it right that this is one of the few price plans which distinguishes call costs on a local and national basis ? (whereas for many others there's no longer a distinction anymore)  For me the local/national distinction  seems a relic of the past and in my response to the renumbering consultation I've called on Ofcom to abandon it so to help address the on-going misinformation regarding national rate and lo-call etc.


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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #7 - May 26th, 2006 at 10:30am
 
gdh82 wrote on May 26th, 2006 at 9:18am:
As you point out, the above increases have taken place under regulation - how does that work - are increases agreed with Ofcom first ?
Yes.  As an example, the recent linerental increase was with permission of Ofcom.
Quote:
Whereas if the matter was deregulated, would that mean in future  BT could increase prices as they see fit (without seeking Ofcom's agreeement) ?
Yes.  Except Ofcom have some undisclosed assurances that some prices wouldn't increase to a certain amount.  As I mentioned BT & Ofcom are keeping confidential what these assurances are and exactly by how much (if any) BT can raise their call charges/linerental.

This is why I'm annoyed that Ofcom's preferred proposal (Option4) is one that it is basically keeping to itself but yet would like, ideally, for us to agree with it despite having no idea what assurances have been made!  As I said the assurances could be that linerental wont increase by no more than £1 or it could be by no more than £3.  It could be anything at all and we really have no idea.

Quote:
Finally you mentioned the BT Light User Scheme being retained.  I imagine this scheme has its positives but is it right that this is one of the few price plans which distinguishes call costs on a local and national basis ? (whereas for many others there's no longer a distinction anymore)
BT Light User Scheme is the only tariff that does disctinguishes between local and national but at the same time if you make very, very few calls (aimed at the older community) then you can have a linerental rebate of nearly 50% (or something similar) which could cut your linerental in half.  Those on BT Light User Scheme are prohibited from using other call carriers and having broadband.  Basically, in return for having nearly half price linerental, you do pay a few pence more for national calls.

If you make a lot of calls then you don't get any rebate in linerental and can be thrown of this tariff.  More info on BT's Light User Scheme here.

Incidentally, BT have tried to get rid of Light User Scheme and In Contact Plus possibly due to the fact its a loss making tariff from their point of view but Ofcom have forced them to keep these tariffs for those on very, very low incomes and the older community that may make very little calls.
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #8 - May 26th, 2006 at 5:16pm
 
At just under 50 pages, this is the shortest consultation we've seen in ages. Thanks to bbb_uk for that list of price increases. I have yet to read the document, but I will be including a timeline of shameful increases that have been allowed.

I was astounded to find out about the removal of BT Standard a couple of years ago. I have been further disgusted at the way in which this privatised company has been allowed to use covert 'micro' increases in price, leaving me paying 50% more for a basic telephone line than I did two years ago.  Angry
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #9 - May 26th, 2006 at 5:31pm
 
Dave wrote on May 26th, 2006 at 5:16pm:
At just under 50 pages, this is the shortest consultation we've seen in ages. Thanks to bbb_uk for that list of price increases.
I'm afraid I can't take credit for compiling this list.  I found it on the MSE forum here where a MSE forum member by the name of AP posted this information.  I added new installation charges that had increased from £75 to £125.
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #10 - May 28th, 2006 at 11:30am
 
My draft response:

Removal of BT price regulation in the retail telephone market is ideal, but only if true competition exists and that can only exist when true price transparency exists.

Price competition does exist for telephone calls to “01" and “02" UK telephone number and to calls to locations outside the UK.  The call cost to any UK location using companies such as www.18185.co.uk,   www.call18866.co.uk and www.call1899.com are free, save for a small connection fee of 3 or 4p.    Call to Australia, Brazil, Italy and USA (to name but a few) cost  1p per minute or less, using the above alternative companies.

The above, contrasts sharply with the cost of non-geographic revenue sharing numbers used in the UK.  - that is, numbers beginning with “084x, 087x,  070 or 09".

Although full price transparency does not exist with the  “09" range of  numbers, consumers are aware that calls beginning with “09" are more expensive than normal and are not included in various call packages (like BT’s option 2 or 3) and are NOT less expensive if an alternative supplier is used. No real competition exists in the “09" range of telephone numbers, but at least the fact that they are different in cost (and treated differently) to a normal call is widely understood.

Again price transparency does not exist with numbers beginning with “084x, 087x and 070" and they are also not included in call packages etc.. In the above number ranges, lack of competition is more damaging to the consumer, as consumers are often deceived as to the true nature and  cost of calls to those numbers. Few consumers realise that the numbers are revenue sharing. No significant competition exists, or is possible by the very nature and structure of  084x, 087x and 070 numbers; telecom companies push the use of the numbers as they can make hidden profits from their use.

Price transparency would exist if all revenue sharing number, without exception, had to be located within a suitable sub-range of “09".  The “09" range can hold 1,000 million number combination. The sub-ranges could be prices from 1p to 150p/minute. A three second price announcement, would be ideal.

If Ofcom does approve deregulation of prices, ( it usually does what it likes, notwithstanding the results of consultations) then it should, in a short time scale, put forward measures to implement true price transparency and competition in revenue sharing numbers.  Ofcom should also seek undertakings from BT that they will put in place measures that aid true price transparency and not make misleading statements to help organisations deceive consumers as to the true nature and cost of calls to 087x and 084x numbers.

Ofcom’s chosen option is based on assurances from BT, but before reliance can be place upon those assurances, Ofcom should ask itself if BT can be trusted to act in the spirit and the letter of any arrangement. All BT’s domestic customers are placed on either Option 1, 2 or 3 - Option 1 is the default option.   Local and National calls cost the same for 99.9% of customers.  BT retain the almost fictional destination between local and national call costs, and calls it “the standard call tariff”. Only the comparative small number of customers on BT’s special “low user scheme” pay the so called standard rate.

We have the undesirable situation in which BT’s “standard tariff” is not the standard tariff at all, and for all practical purposes all 01/02 calls coast 3p/min or less. The existence of the largely fictional “standard tariff”,  which makes a distinction between local and national calls, allows organisations to claim that “0845 is only a local rate call”.  When I recently complained about the call cost of my local HSBC branch converting to “0845", it required quite a complex letter of complaint. In reply, HSBC was able to say that “0845" was a “local rate call” and implied that they were doing me a favour in changing from a geographical number to “0845".  The same is true for the pernicious “0844" numbers which telecom companies are increasingly persuading organisations to use, under the guise of “it’s only a local call” or is generally perceived as such.  It is ironic, that it cost me 400% more to telephone my local HSBC branch on 0845, located 15 minutes away, than to address my enquiry to the New York branch of HSBC.

It is scandalous and indefeasible that a designated category exists (09) for the use of “above normal cost” telephone calls, but is sidestepped by the use of clandestine revenue sharing in other number ranges, especially 087x and 084x..

Ofcom should not accept BT’s assurances until BT behaves in an open and honest way.   This could start with BT making an unequivocal statement that all UK calls (01/02) from landline cost the same, regardless of location, and that the distinction between “local” and “national” rate calls has been abolished.  This statement, conspicuously repeated on all bills and web sites, until it is firmly lodged, could even make BT more money, from an increased use of the telephone by consumers calling distant parts of the UK.
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #11 - May 28th, 2006 at 5:39pm
 
kk wrote on May 28th, 2006 at 11:30am:
Ofcom’s chosen option is based on assurances from BT, but before reliance can be place upon those assurances, Ofcom should ask itself if BT can be trusted to act in the spirit and the letter of any arrangement.
kk, I don't know about you but whatever assurances BT have made to Ofcom they are keeping between themselves and that I don't like.  What assurances do us consumers have that the assurances that BT have given to Ofcom are not something like, "we wont increase our linerental more than £3", and ofcom have agreed to this.

I for one am not going to take Ofcom's word that their so-called assurances they have from BT are in-keeping with what's best for us consumers - it can easily be favoured in BT's favour than ours.

There has been no evidence to date that supports Ofcom's theory that competition will keep BT's prices down.  In fact, everything BT have done has only increased prices and the other so-called competition have just followed suite with BT and increased their prices in-line with BT's (in most cases) or ever-so-slightly cheaper.  Again, from what I can see, there is no sign that competition alone will keep BT from increasing their prices.

I personally will not be choosing option 4, more than likely option 2 or 3 but I haven't made a firm decision as yet.

Ofcom should never have proposed an option without giving us the full facts behind their decision - instead agreeing with BT that commerical confidentiality is more important than allowing us consumers to make a fully-informed decision.  Grin

This all boils down to me losing complete faith in our so-called regulator and what they think is best for us consumers.  So far, Ofcom's policy does appear to be what's best for businesses!
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« Last Edit: May 28th, 2006 at 5:43pm by bbb_uk »  
 
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #12 - May 29th, 2006 at 12:14pm
 
bbb_uk wrote on May 28th, 2006 at 5:39pm:
... In fact, everything BT have done has only increased prices and the other so-called competition have just followed suite with BT and increased their prices in-line with BT's (in most cases) or ever-so-slightly cheaper. ...

bbb_uk, I understand you have had a cable line in the past. Have there been price rises on cable and what's the most basic package?
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« Last Edit: May 29th, 2006 at 2:22pm by bbb_uk »  
 
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #13 - May 29th, 2006 at 2:21pm
 
Dave wrote on May 29th, 2006 at 12:14pm:
I understand you have had a cable line in the past. Have there been price rises on cable and what's the most basic package?
From what I observed, TW increased their prices to match that of BT's. 

TW most basic recently went up from £10.50 to £11 (following BTs linerental prices increase).  Their call charges were generally the same as BTs except TW have free weekend (obviously geo's only) calls whereas BT have their 5.5p for an hour at weekends.  On the other hand, TW charge 2ppm evenings whereas BT charge 5.5p for an hour.

TW higher-end package costs same as BT's (always has done from what I remember) but TW have recently introduced a 60min call length before the call becomes chargable (ie same as BT).

TW have always been more expensive on their calls than BT because with TW you have a 6p connection fee as well as the ppm, whereas BT have a minimum call charge (ie without the 6p connection fee).  This was even for geo calls.  NGN calls are more expensive but that, to a certain degree, is beyond their (TW) control due to how NGNs work.

TW used to charge £1 for a calling features which has increased to £1.50.  I believe its the calling features that are actually only thing cheaper than BT but that assumes you don't make use of BT's slight discount for several calling features.  TW, like all other teleco's, charge for CLI.

TW has a phone-comparison page here that used to state the differences (very minor - ie unlimited call length and not 60mins like BTs) between them and BT but looking at the page now, it doesn't mention BT at all and basically just gives a summary of their calling packages.
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Re: Deregulation of BT prices * DEADLINE THIS TUES
Reply #14 - May 29th, 2006 at 7:13pm
 
Has anyone actually looked at how the questions are worded?

Quote:
1. Do you think that there are other forms of regulation that we should consider?
2. Do you agree with our conclusion, and the assessment on which that conclusion is based?

Now is it just me or is is that not one of those questions asks which of the four options you think is better?

The first question asks if there are other forms of regulation apart from those mentioned (I assume) and the second question do you agree with Ofcoms preferred option 4.

Don't Ofcom make you laugh?
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