The Carphone Warehouse's (CPW) pledge that if it ain't cheaper than BT it'll cough up £1,000 could be about to be tested following BT's claim that it is now cheaper than CPW.

BT says that Carphone has raised some bill-paying charges to £3.50 a month, while the monster telco insists it only charges people who don't pay by direct debit just £1 extra.

Plus, the UK's dominant fixed line telco says that some of its tariffs are now cheaper that CPW's TalkTalk service, based on analysis from comparison site uSwitch.com. As a result, it's egging on TalkTalk punters to take up a challenge made by CPW boss, Charles Dunstone, in April who boasted: "We are so convinced TalkTalk will save you money over BT, if we can't prove it, we'll give you £500."

Since then, the cash on offer has doubled to a cool grand with CPW claiming "Cheaper than BT Guaranteed! Or we'll give you £1,000". Now BT has decided to face the "challenge" head-on and is calling Dunstone's bluff.

Tough-talking BT exec, Gavin Patterson said: "They made a big play of offering £1,000 to any BT customer who changed to Carphone Warehouse and wasn't better off as a result. Well we think it might be interesting for people to take Charles Dunstone at his word and see if they can relieve him of £1,000.

"Carphone Warehouse has scored a bit of an own goal by charging customers who don't pay by direct debit an extra £3.50 a month. Our prices were already great value and within a whisker of the cheapest available. These charges mean that for some people who want to see the bill before writing a cheque BT will now be cheaper than Carphone Warehouse," he said.

A spokeswoman for CPW said: "We don't understand Gavin's point. Direct debit is mandatory to join TalkTalk: if you can't pay by direct debit you can't be a TalkTalk customer. This is made very clear if you try to join TalkTalk on the site [uSwitch.com] referred to by BT. ®

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