Trying to revive ADSL: Verwaayen unveils 40% cut in BT broadband prices
By Martin Arnold, Robert Budden and Thorold Barker in London
Published: February 26 2002 08:28 | Last Updated: February 26 2002 09:22
Ben Verwaayen on Tuesday took his first major strategic step since taking over the reins at BT Group, announcing a widely anticipated plan to kick-start "Broadband Britain" by cutting the wholesale prices it charges internet service providers by 40 per cent.
BT said Mr Verwaayen was putting "his foot on the accelerator for broadband growth" and had set a target of reaching 1m high-speed DSL connections in the UK by the summer of 2003.
The UK government has been pushing for strong broadband growth but to its embarrassment, only about 136,000 users have so far been connected to a DSL service - which runs across traditional copper telephone lines - compared with about 2.1m in Germany.
The price cuts at BT - from £25 to £14.75 per month per user - are wider than many analysts and executives had expected. BT said they would allow internet service providers to reduce their end-user prices to below £30.
AOL, one of the UK's leading ISPs with 1.7m subscriber households, said on Tuesday the cuts were "very positive" for its customers. "We are currently examining the details, but it is already clear that this takes us much closer to the dawn of Broadband Britain," said Karen Thomson, chief executive of AOL UK.
BT said it would encourage all ISP's, including its own BTopenworld, to combine the price cuts with their own campaigns to promote the take up of broadband. It also said it would seek partnerships to extend broadband to less commercially viable areas.
Mr Verwaayen said: "This is a stretching programme, but achievable. Through substantial reductions in the cost of providing service we can set prices that will stimulate the market strongly, and make money on it.
"We are committed to making broadband widely available. We are driving for growth across the entire market. To be sure of meeting these targets we need the support of the entire broadband community including particularly content creators and providers."
However, there are others who see a danger that BT's attempts to stimulate broadband growth will also kill off the attempts of rival companies, such as Bulldog Communications, which offers a rival wholesale offering, to compete with BT in its local network by pricing them out of the market.
Oftel will investigate the claims and is expected to make a decision on the latest price cuts in the next month. But the process of throwing BT's network open to competition - known as local loop unbundling (LLU) - is already on its last legs.
The number of participants has slumped from 40 to three amid claims that BT has stifled its development. And in spite of Patricia Hewitt saying when she was e-commerce minister that there would be "widespread unbundling" by July this year, only 150 of BT's 25m exchange lines are now in the hands of competitors. |
