The cost of renting a phone line from BT Retail is to increase by 50p a month from January as part of a set of measures to increase competition in the UK's telco sector.

"From 1 January 2006, the line rental for BT Together Option 1 customers will increase by 50p, from £10.50 to £11.00 a month," said the telco in a statement today. "For other packages, such as BT Together Options 2 and 3, the line rental remains unchanged. BT customers will be notified in writing with their next telephone bill."

This increase in retail line charges comes as the cost of Wholesale Line Rental (WLR) - which enables rival telcos to bill punters for line rental and calls on a single bill - looks set to fall still further opening up a bigger margin between what BT Retail charges and what other phone companies have to pay.

According to regulator Ofcom this is important because if telcos want to compete effectively with dominant telco BT - which has some 18m punters - they need "a clear margin between the wholesale price they pay to rent a telephone line from BT, and the price that they charge their retail customers for line rental".

"Increasing this margin will mean greater competition in the calls and line rental market, expanding consumer choice and increasing value for consumers as more providers compete for their custom," said the regulator today.

And although the cost of WLR fell earlier this year from £9.24 to £8.74 a month, Ofcom is looking to see prices cut by a further 9 per cent for residential WLR and 8 per cent for business WLR.

Today's announcements come as Ofcom confirmed that after two years of BT dragging its heels, the WLR product offered by BT finally "meets a series of agreed product criteria, subject to specific conditions".

Despite the problems that have frustrated industry, there are now almost two million WLR lines in the UK with take-up increasing by more than 130,000 orders a month. ®