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1.8m may be stopped from accessing web

BT plans increase other ISPs' costs

As many as 1.8 million Brits could find themselves unable to access the web thanks to BT, says a leading economist.

Around eight million homes in the UK don't currently have access to the web. However, regulatory body Ofcom issued new proposals last week that it hopes will ensure everyone in the UK has access to the internet.

Among the measures suggested was a proposal by BT to increase the price it charges for letting other ISPs access the copper wires that connect homes to the their local BT exchange.

BT wants to increase the cost of accessing its network by 11 percent - from £81.69 to £91 - in April this year, followed by further increases over the next three years, taking the total cost of accessing the copper telephone wires to £111 per annum.

According to Dr Chris Doyle of Warwick Business School, ISPs will be unable to absorb the increase completely, which will no doubt lead to increases being passed on to the consumer.

"The Government recently set out ambitious plans to include all households in the digital revolution so it is puzzling that the regulator is proposing to allow BT to increase wholesale prices and so raise the barrier for lower income households," he said.

Broadband speed tester

"The UK introduced competition into telecoms before almost every other EU member state, it has one of the highest population densities in Europe and a population size, which allows for scale economies. All these factors, together with the elaborate regulatory oversight of Ofcom, should combine to make BT the most efficient and lowest cost provider in Europe with no need for increases to wholesale charges warranted at this stage."

BT says the increase will offset the cost of upgrading the UK's ageing copper network to fibre cables capable of offering speed of up to 100Mbps. However, Ofcom has already stated that the two activities should not be linked and BT should not pay for fibre cables by increasing the cost to broadband customers.

"My analysis suggests that there is no reason why BT cannot continue to make a fair return at the current prices," Doyle added in reference to a report written in conjunction with ISP TalkTalk that the pair intend to submit to Ofcom.

"BT needs to decide whether it wants to be part of Britain's digital future or a barrier to access and inclusion. Dr Doyle's analysis shows that BT simply has not made the case for price increases and I hope Ofcom considers his findings carefully," said CEO of TalkTalk, Charles Dunstone.

BT criticised the report by TalkTalk and Dr Doyle, saying it was "riddled with the most elementary mistakes". According to BT, the UK has some of the lowest broadband prices and the highest broadband penetration of any European country and that while other utility bills have soared, BT's wholesale prices have been at the agreed level or lower for four years. 

BT also highlighted there was a series of price cuts of up to 60 percent introduced "just last month".

"These cover some of the principal products bought by Carphone Warehouse and other service providers," said the ISP.

BT also revealed that  any price changes introduced in the future will have to be approved by Ofcom and it will be up to service providers whether to pass these on to their customers or not.

"BT is not making excessive profits and is not exaggerating costs."

Emma Gilthorpe BT's Director of Industry Policy and Regulation said: "It is astonishing and ludicrous to suggest that people will be locked out of Britain's Digital revolution by BT. The UK has the most competitive broadband market in the world, thanks in large part to the massive investment made in broadband infrastructure by BT".

See also: Outrage as BT customers locked in for another year


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