BT's share of the UK's voice call revenue has dropped below 50% for the first time, says Ofcom.
The regulator's Communications Market Report 2007, says competition in the provision of phone services is continuing to increase.
Although BT is diversifying its revenue streams in other areas, Ofcom said BT's share of fixed voice call volumes fell to 48% in 2006. In addition, BT's share of all telecoms connections (including mobile) fell to 23% last year, compared to 26% the previous year.
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Increased competition is driving down overall telecoms prices for consumers, said Ofcom.
A typical basket of residential telecoms services - including a fixed line, two mobiles and a broadband connection per household - was £6.51 or 9% cheaper in 2006 when compared to 2005.
Over the five years to 2006, the same bundle has been reduced by £34.97 in real terms.
The report says that by April 2007, 53% of UK households had a broadband connection.