Centrica threatens to sue over BT line price hikes

Centrica, the utility group, is threatening legal action against BT after the phone giant announced a controversial new pricing package last week. The changes will affect all users of fixed-line phones. Media and telecoms regulator Ofcom said it was "urgently" examining the details of the new deal this weekend.

Centrica, the utility group, is threatening legal action against BT after the phone giant announced a controversial new pricing package last week. The changes will affect all users of fixed-line phones. Media and telecoms regulator Ofcom said it was "urgently" examining the details of the new deal this weekend.

But Centrica, which operates under the One.Tel and British Gas Communications brands, is consulting lawyers about taking its own action if Ofcom decides not to investigate BT. One option would be an appeal to competition authorities in the European Union. Ofcom is expected to announce its decision on Wednesday.

Last week, BT angered other telecoms companies and consumer groups by increasing fixed-line rental charges for all customers. Following deregulation, customers can change the call provider they use. But because BT still owns most of the fixed-line telephone network in the UK, it charges rivals' customers for line rental.

Under the new tariff, BT will charge all customers £10.50 a month for line rental, compared with £9.50 a month on its old standard tariff. At the same time, BT also introduced lower tariffs for its own customers' calls. BT says this means that for most of its customers, bills will fall overall.

But rivals said BT customers who rarely use their fixed-line phones would be worse off, as would their own customers, who faced higher fixed-line rental charges without benefiting from BT's lower call rates.

Centrica managing director Ian El-Mokadem said: "The biggest effect of these changes will be to stifle competition in its early stages.

"This is the first real test of Stephen Carter [Ofcom's chief executive] and his team. The whole industry is looking to him to see what he does."