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The wholesale price of renting the lines up to the properties from BT will now have an upper limit of £8.39 a month for residential connections, and £9.17 a month for businesses - cuts of 9 and 8 per cent respectively.

Ofcom says the reduction in price is to help fuel competition in the supply of fixed line services. 'Ofcom believes that over time, more choice of supplier and more services offered via a single bill will increase value for money for consumers and businesses,' it says.

Jon Miller, director of Ofcom-accredited price comparison and switching service uSwitch.com said: 'Home phone companies who have previously been holding back on taking the plunge may now launch line rental products and services

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of their own. If the providers pass on these price decreases, consumers are set to see their line rental costs fall by around nine per cent.'

Aside from BT, there are four major fixed line providers taking advantage of renting BT lines: TalkTalk, Post Office, Onetel and Homecall. The question will be whether the cap will encourage more players into the market with the prospect of making a little more profit on line rental, or whether those savings will be passed on to the customer.

This may be just the start of increasing pressure on the line rental bill. As ISPs start to offer phone services over the Internet, customers may increasingly see having to pay the rental cost of a phone line as obsolete. Certainly sources at Wanadoo told us that as their customers come on board their Wireless & Talk service they will be looking at line rental as a tax.

PlusNet, who offers the PlusTalk VoIP service, was more conservative. Neil Armstrong, Head of Marketing, PlusNet told us, 'What the industry needs to get its head around is that we're only a couple of years away from all calls being free using VoIP. It's good to see line rental coming down, it should be lower, but there is a cost to providing a line into someone's home, so somewhere along the line the cost of providing the service must be met.'