BT faces a challenge to its hold on the UK residential telecoms market following news that two of the country’s leading supermarket groups are planning to launch services which will undercut the incumbent.
According to weekend press reports, Talktalk, a joint venture from J Sainsbury and the mobile phone retailer Carphone Warehouse, will offer fixed line services up to 30% cheaper than those of BT.
Talktalk is set to launch next month and will be initially be targeted at customers in London.
In the meantime, Tesco, the UK’s largest supermarket chain, has revealed that it is to join forces with Cable & Wireless to offer a rival service. It is believed that other companies are also waiting in the wings to provide new competition for BT.
According to the telecoms regulator Oftel, fixed line penetration in UK homes stood at 91% in September 2002, with a further 8% relying solely on mobile phones. BT handled 72.3% of all local calls, 50% of the national market and 28.6% of international calls, well ahead of cable operators NTL and Telewest.
Nonetheless, having been forced to reduced its wholesale leased line and line rental tariffs, BT’s dominance in the UK market is under threat. The telecoms giant has also cut the price of its DataStream broadband carrier service by 70 pence per month after pressure from Oftel and rival operators (see BT Urged To Cut Internet Fees).
