Re: What's the point of a "contract"
This scenario can cut both ways. I contracted at one place that decided to terminate all contracts and re-instate them from a standardised renewal date and aligned all the notice periods etc. I took the opportunity to negotiate an increase in my day rate for the new contract.
When someone complained and said that I was doing the same work, I just told them it wasn't my idea to terminate my contract for no good reason, and you gave me an opportunity to re-negotiate. It's a question of timing. Similary another firm cut contractor rates by 10% across the board, I negotiated a 10% increase instead.
If BT have got their timing right they'll get away with this and not lose too many 'tractors. Considering the current jobs climate, I'm pretty sure people are going to be grateful to *have* a contract. Personally if I was at BT and my skills were in demand, I'd be asking for a longer renewal period than usual to offset the rate cut, but that's just me.