LONDON, July 19 (Reuters) - UK telecoms regulator Ofcom is to remove retail price controls on BT (BT.L: Quote, Profile, Research) for line rentals and calls, having deciding that competition had finally reached the required level 22 years after privatisation.

The watchdog said the changes would come into effect from Aug. 1, adding BT had agreed to limit increases in its charges for basic line rental product to avoid hitting customers for whom line rental accounts for a large chunk of their phone bill.

"We will now look at how we can simplify our pricing structures and make them more user-friendly," BT Retail Chief Executive Ian Livingston said in a statement.

"Over the last decades prices have come down by a billion pounds and we expect to see that trend continue," a spokesman for the firm added.

Following the news, BT shares were little changed at 226 pence by 1204 GMT, valuing the business at around 19 billion pounds ($34.7 billion).

BT remains subject to Ofcom controls on the wholesale prices it can charge other telecoms and broadband providers to use its networks, as well as the price it charges other companies to have their equipment in BT's exchanges.


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Analysts said Ofcom's decision to remove the controls had come quicker than many predicted.

"It has come sooner than expected and should be positive for market share and obviously beneficial for consumers," Bear Stearns analyst Jonathan Dann told Reuters.
The move comes as competition for Britain's telecoms and broadband customers ramps up with a number of less traditional players such as media firm BSkyB (BSY.L: Quote, Profile, Research) and supermarket giant Tesco (TSCO.L: Quote, Profile, Research) all trying to grab a piece of the action.



BT, which estimates it has around 58 percent of the UK's traditional lines and calls business, currently charges retail customers 11 pounds per month for line rental, with aggressive competitors such as Carphone Warehouse (CPW.L: Quote, Profile, Research) and *** Telewest (NTLI.O: Quote, Profile, Research) offering it for about the same.

In 1984, BT became one of the world's first state telecom companies to be privatised and was one of a string of national firms to be floated under Conservative Prime Minister Margaret Thatcher.

Since privatisation, the former monopoly has been subject to a swath of rules and regulations designed to stop it taking advantage of the investment in the UK's telecoms network paid for by the state.

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