BT cuts wholesale BB charges again

Cautious welcome

By Tim Richardson, 4th September 2003

Magic Quadrant for Enterprise Backup/Recovery

BT has avoided a showdown with the telecoms regulator by agreeing to further cost cuts on a key wholesale ADSL product that enables rival telcos to compete with the dominant telco.

BT is to cut the cost of the end-user element of its Datastream broadband connection by 50p to £8.05, which is on top of the 70p a line reduction made earlier this year.

At the same time, BT is raising the monthly rental of its 2Mbit/s business product, IPStream Office 2000, from £38 to £43. BT's IPStream S2000 rental will also go up from £43 to £48.

The DataStream price cut comes into effect tomorrow, while the other changes will be effective from 16 October.

The significance of today's announcement lies in the nature of the two wholesale products and the row that erupted earlier this year following price cuts to IPStream.

IPStream is an end-to-end product used to provide wholesale ADSL broadband connectivity for Internet Service Providers (ISPs). Datastream allows telcos to use their own IP network to provide wholesale broadband Internet access services in competition with IPStream.

In April, BT announced it was to cut the wholesale cost of its IPStream product. However, the move was savaged by those who accused BT of anti-competitive behaviour, claiming that the price cuts discriminated against operators with rival networks including those involved in opening up the local loop.

They argued the price cuts applied only to BT's wholesale IPStream product, which provides an end-to-end ADSL service solely using BT's network. The cuts did not apply to DataStream products, which use competing national networks from alternative rival carriers.

In May, BT bowed to pressure from Oftel and cut the cost of its wholesale Datastream product by 70p a month, but this didn't go far enough for BT's rivals. They upped the pressure on Oftel, claiming that BT was involved in anti-competitive behaviour.

In June, Energis - backed by Tiscali and Your Communications - submitted a new complaint to Oftel under the Competition Act in a bid to increase the pressure on BT to loosen its "stranglehold on the [UK's] wholesale broadband market".

Today's price cut is a result of continuing dialogue between Oftel and BT following the industry complaints.

Tiscali has given a "cautious welcome" to today's news. Sergio Cellini, CEO Tiscali, UK said: "This is moving the right direction and is good news. We need to look at the overall impact but there is probably a little more movement to establish parity." ®