Sara Yirrell

It is an interesting development that two telecoms vendors have accused rival BT of squeezing margins abusively to eliminate the competition.

Gamma Telecom and Thus last week complained to Ofcom that the telecoms behemoth is selling wholesale end-to-end voice calls to the channel, which contravenes Chapter II of the 1998 Competition Act and Article 82 of the EC Treaty, relating to the abuse of a dominant position.

The firms, which will in all probability be joined by other telecoms players such as Cable & Wireless in their complaint, claim that BT’s pricing has been below cost price and is solely aimed at weakening the competition.

I can completely understand Gamma and Thus’ point of view because they have probably lost potential customers as a result. However, in the resellers’ eyes this can only be a good thing because it signals a price war.

It is the same when supermarkets start to cut petrol prices on the forecourt as they look to attract motorists that are fed up with paying through the nose for their fuel. Prices become cheaper and everyone shaves a small amount off their nearest competitor’s price to attract the business.

In tough economic times, the best way of keeping customers is to have reasonable prices from the outset. Everybody needs competition to keep them going ­ which is where BT needs to be careful.

But the main lesson is that lower prices attract business and should be embraced as the norm.

Sara Yirrell is editor of CRN ­ sara.yirrell@incisivemedia.com

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