BT to cut wholesale broadband prices

 

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Posted on 13 Nov 2006 at 12:10

BT has announced that it plans to reduce its wholesale broadband prices in order to give Internet service providers a cost-effective alternative to local loop unbundling.

Once 1.5 million lines have been unbundled across the country, which BT estimates will be in May 2007, service providers will see the rental charge for the most highly used wholesale broadband product - BT IPstream - reduced by nine per cent.

BT expects to reduce this further in a second round of changes planned for January 2008.

There will be further savings for service providers at high density exchanges, where the per-user cost to BT of providing broadband services is lower. The current rebate scheme that applies at 561 exchanges will be extended to cover 1,016 exchanges and the amount of the rebate increased by more than 12 per cent. Further increases to the rebate are also planned from January 2008. The rebate will also apply to ISPs using BT Datastream to provide services.

'These pricing proposals will help our ISP customers develop their business plans and compete effectively in the broadband market,' said Cameron Rejali, BT Wholesale managing director for products and strategy. 'The proposed prices better reflect the economies of scale and input costs we face, meaning we can deliver lower average costs to ISPs. The industry has been waiting to hear how we will enable them to compete with the local loop unbundlers and so these proposals should allow them to plan ahead.'

BT Wholesale has also started to purchase LLU connections from BT Openreach and as a result, the connection charge for IPstream and BT Datastream products will fall from £40 (ex. VAT) to £34.86 (ex. VAT).

As a result, there will now be a £33.75 (ex. VAT) charge to ISPs for the termination of a broadband connection, to cover Openreach's charges. This charge will not apply when a consumer wants to move from one service provider to another, as long as both service providers use the MAC (Migration Access Code) process. BT wants to encourage more service providers to participate in the MAC process, currently being reviewed by the industry's regulator, Ofcom.

BT Wholesale also confirmed today that it intends to trial a Wholesale Broadband Connect product in selected exchanges across the UK from Summer 2007.

This broadband service uses BT's 21CN network, which will make its debut in Cardiff this month, and uses both ADSL and ADSL2+ technology. The technology will both enable communications providers to connect their broadband and data customers to their own networks and services efficiently. It offers speeds up to 24Mbps.

BT anticipates that Wholesale Broadband Connect will be available to almost half the UK from early 2008.

Author: Simon Aughton