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The monthly rental that BT charges Internet service providers (ISPs) for its IPstream product will be cut by nine per cent. IP Stream is the service that ISPs use to provide broadband connections up to 8Mbps to end users.

There will also be further savings for ISPs at exchanges in population centres to reflect the lower cost of providing broadband in these areas. The current rebate scheme that covers 561 of these exchanges will now apply to a total of 1,016 exchanges, with the level of this rebate set to increase from £1.10 to £1.24.

The increase in the rebate, combined with the lower rental price, will reduce the

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net monthly rental price by 12.5 per cent. The extended rebate scheme will also apply to ISPs using the less widely implemented BT Datastream.

BT will also reduce the connection charge for both IPstream and Datastream from £40 (ex. VAT) to £34.86 (ex. VAT) from 1 May, to provide parity with the price of BT's Openreach LLU product. It should enable ISPs that resell IPStream and Datastream to better compete with those that run unbundled services.

'The new pricing will deliver significant cost savings to our service provider customers and underlines BT's commitment to maintaining a competitive broadband market,' said Cameron Rejali, managing director for products and strategy, BT Wholesale. 'Combined with the price reductions announced today and our focus on quality of service, we believe that our plans for Wholesale Broadband Connect will allow our service provider customers to compete effectively in the broadband market.'

This is the first of two reductions in charges to ISPs that it announced last November, with the second scheduled for January 2008 to coincide with the telco's introduction of ADSL2+ services up to 24Mbps.