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BT's share of the UK's broadband market is being eroded because its packages are too expensive compared to other ISPs.

While BT Wholesale's overall share of the broadband market continues to do well against cable, the same can't be said for BT Retail which offers packages (such as BT Broadband Basic and BT Yahoo! Broadband) direct to punters.

Two years ago, six in ten of all end-user DSL connections were supplied by BT Retail - the telco's customer facing division. This year that number has slipped to just four in ten. In fact, BT Retail's share of the UK DSL market has fallen every quarter since September 2002. And its share could fall still further unless it cuts prices to compete with rival ISPs.

According to research from Ender Analysis, BT's share of new subscribers signing up to DSL is also dropping. In Q3 2002, half of all customers hooking up to DSL chose BT. At the beginning of this year BT's share of new customers fell to just three in ten. Unless BT can reverse this downward trend, its overall share of the DSL market will continue to fall.

Enders Analysis says that BT must cut the cost of its broadband products if it stands any chance of competing with rivals AOL, Tiscali and Wanadoo. Sources have already told The Register that a price cut is on the way and could be announced as early as this week.

While BT tries to figure out how to hang on to its dwindling market share, the big winners have been Tiscali and Wanadoo (formerly Freeserve). In the first three months of the year Tiscali's share of new DSL customers grew to 28 per cent following the launch of its 150k service at £15.99 a month.

Since then, Wanadoo has taken the wind out of Tiscali's sails following the April launch of its £17.99 a month 512k service. It is currently adding between 12,000-15,000 new punters a week, giving it 25 per cent share of new DSL punters. Nine in ten of all Wanadoo's new punters are hooking up to the £17.99 a month product.

Overall, BT commands 42 per cent DSL market share followed by AOL (13 per cent), Tiscali (10 per cent), Wanadoo (8 per cent) and Pipex (5 per cent). ®

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