BT's broadband price cuts, announced earlier this week, may not be as good a deal as they initially appeared. The company is increasing wholesale broadband installation charges to claw back the revenue it is surrendering by cutting the bandwidth fees levied on ISPs.
The company's chief executive, Ben Verwaayen, said the cuts would be "a stretch" but were doable.
But instead of ISPs being charged £150 for each consumer installation, from 1 April they will have to pay £210, an increase that will probably be passed on to the consumer.
"A third of our customers are already on self-installed [plug and play] connections which cost just £50," said BT spokesman David Orr. "Whether connection charges increase is up to each ISP and nothing to do with us."
BTopenworld, the telco's broadband arm, and competitor Freeserve have not yet announced new installation charges for April — perhaps they are enjoying being the bearers of good news for a while.
Openworld's competitors are already complaining about the effects of the new reduced broadband charges.
"These broadband measures will no doubt positively impact broadband, yet simultaneously could detrimentally affect [our] ability to offer a competitive wholesale service," said Richard Greco, CEO of ISP Bulldog Communications.
"In fact, without equally aggressive cuts in wholesale costs for operators like Bulldog, it is unlikely there will be any wholesale DSL (digital subscriber line) competition. The result would mean no choice, no differentiation in service offerings and further monopolistic control of the broadband DSL market by BT," added Greco.
The company is currently in talks with Oftel about LLU (local loop unbundling) reductions.
"Under EU regulations BT is obliged to pass cost savings on to LLU operators," said a spokesman at Oftel. "We have no doubt the wholesale cost reductions BT has identified will be passed on to LLU operators."
Whether installation prices for consumers will now increase waits to be seen, but those people who are thinking about switching to broadband may be wise to do so before 1 April.