'Large number' of ISPs face ruin - UKIF

Unable to compete

A "large number" of the UK's ISPs could go bust following Ofcom's decision to allow the wholesale cost of some business broadband products to rise by as much as 30 per cent.

The worst fears of new industry group UKIF were realised today after the monster communications regulator published its statement setting the Margin between IPStream and ATM interconnection Prices. Ofcom maintains that this will help "promote effective and sustainable competition" for wholesale broadband products.

However, the UKIF - which represents more than 70 small and medium-sized ISPs - reckons the move has "put them in a position where they will be unable to compete and will be faced with terminating their business". UKIF reckons that instead of "promoting effective and sustainable competition", the move reduces competition and concentrates the control of the market among the hands of a few large ISPs.

Said Robert Kemp, MD of KeConnect: "This is not really surprising and it is more of the same of what small and medium ISPs have heard from the regulator. Ofcom claims that it wants to promote competition, but it would be very difficult for my company, and for many other ISPs, to compete in what is essentially a non-competitive market."

Last Friday UKIF met with Ofcom in a last ditch attempt to try and block the move which saw some of their wholesale prices for broadband increase by 30 per cent. Speaking afterwards, John Tsai, VP of ISP Entanet, said: "Friday's meeting with Ofcom left a rather bad taste in the mouth. The overriding feeling was that Ofcom had already made its decision."

At the beginning of August BT Wholesale told ISPs that it would increase its BT IPStream Office and BT IPStream S products from 1 September. At the time BT said it was forced to increase prices to comply with new regulatory measures. Said a spokesman: "We didn't think it [the price rises] would be popular but it is something we had to do." ®

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