Telco BT today announced plans to cut the price of wholesale broadband connections by up to £2 per customer per month and extend its broadband reach to 80 percent of the country by next year.
Wholesale prices will be cut from £14.75 to £13 with a further discounts available for volume customers — these will be staggered discounts for ISPs with over 15,000, 50,000 and 100,000 signups. But it's still uncertain whether these price cuts will be filtered down to the home user. BT said it expected announcements to be made over the next few weeks but Freeserve and AOL said they had no plans to reduce prices to their customers.
The telco's cost-cutting means wholesale prices for small business customers using 500Kbps (kilobits per second), 1Mbps (megabits per second) and 2Mbps products will come down by a staggering 50 percent, according to CEO Ben Verwaayen.
ISP V21 was the first to announce its price drops which promise to save small businesses up to £75 in initial ADSL setup fees and reduce monthly subscription costs by up to £36.
The savings only apply to those who rent BT's IPStream network, leaving ISP's such as Tiscali, which pays BT a monthly charge to hook up into its own DataStream infrastructure, less than impressed.
"A 50 percent reduction has been applied to business broadband products — those that most directly compete with DataStream," said Sergio Cellini, Tiscali UK's CEO. "If similar price cuts were applied to DataStream it would ensure cheaper prices for the consumer. This is a clear discrimination against DataStream and is an effort to squeeze competitors' margins.
"This is Broadband BT not Broadband Britain," he added.
The telco giant also revealed it has made "technological advances", which include fibre optic networks and the integration of new software into existing networks, giving it the potential to reach 90 percent of UK homes and small businesses. BT's broadband services currently offer around 67 percent coverage.
The new initiative means trigger levels can be set for a further 600 exchanges, although BT has made no promises that trigger levels, currently set at between 300 and 500 registrants, will be lowered.
"Our work with the public sector means that, for example, every doctor's surgery that signs up for broadband will be counted towards trigger level targets. We will be assessing each exchange before any announcement is made," said Verwaayen.
Trigger levels for the first 200 exchanges will be announced within the next week, and are expected to take coverage up to 75 percent. Levels for the remaining exchanges will be announced in the next few months.
BT is confident it will reach its target of one million subscribers by this summer, having already passed the 800,000 mark.