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BT slashes cost of broadband

Finally, fast, cheap internet connections

Affordable broadband internet access is at last on the way. BT today finally unveiled long awaited cuts in the price of its wholesale broadband service in the UK.

Wholesale line rental – which is what internet service providers pay BT for bandwidth - will drop from £25 to £14.75 a month from 1 April, a decrease of £10.25.

How this affects consumer prices will depend on how much of the 40 percent cut the ISPs hand on to their customers.

Pipex has already announced price cuts, from 1 April, of £10 a month to its broadband service, Xtreme. Customers will now be charged £23 a month.

PlusNet, too, has duly reduced the monthly charge — also from 1 April — for its 12-month contract self-install Home ADSL service from £35.25 to £23 inc VAT. But its ADSL Home accounts will no longer have a domain name included. This will be an optional extra with a charge of £2 (ex VAT) per month, per domain.

BTopenworld, which currently provides broadband services to consumers for around £40 a month, the same price charged by competitors Freeserve and AOL, has yet to adjust its end-user prices.

"[We] have lobbied long and hard for BT to reduce wholesale pricing, and can now offer broadband to consumers at a price that will drive high levels of take up," said John Pluthero, chief executive of Freeserve.

Freeserve said it would release pricing details nearer to April.

"We are presently examining the details, but it's already clear that this takes us much closer to the dawn of broadband Britain," said AOL's chief executive Karen Thomson.

Telewest's Blueyonder broadband service is already £25 a month, and the company has no plans at this stage to cut the cost of its service.

"So far, with our cable colleagues at NTL, we have connected more broadband customers than BT," said Adam Singer, group chief executive at Telewest. "Using the technical superiority of our cable network we are going to play full-contact broadband with BT and will keep raising our speed until they run out of puff."

BT said it could afford the price cuts because, basically, its technical costs had come down; it denied it had initially been overcharging for its services.

E-commerce minister Douglas Alexander, who has been championing the benefits of broadband throughout several schemes over the last year, welcomed the price cuts.

"Five months ago, I challenged BT to lower broadband prices. BT has now taken up this challenge. Provided BT's wholesale prices remain fair, today's announcement is excellent news for consumers and business," said Alexander.

BT's goal is to serve one million ADSL subscriber connections by 2003; there are currently 145,000 users signed up to BT's Home200 service.

The UK national telecommunication regulator, Oftel, sounded a note of caution while welcoming BT's price cuts. "We are for any cut in prices provided they are fair and not anticompetitive," an Oftel spokesman said.

Originally, 40 companies were involved with local loop unbundling collocation sites, he said, but that number is now down to three, and of BT's 25 million exchange lines, only 150 are currently being run by BT's competitors.

BT has provided Oftel with "a certain amount of information about how they arrived at the price cuts and other details", and Oftel will determine if the new pricing meets regulation requirements within the next month, said Oftel's spokesman. "The main issue is that BT cannot offer any product below wholesale," he added.


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