Government urges BT to cut ADSL costs

Taskforce persuades the e-commerce minister that the UK would be much better off if BT cut the cost of its wholesale and retail broadband packages

The UK's e-commerce minister, backed by the government's Broadband Stakeholder Group, has called on BT to boost the rollout of broadband Internet services in the UK, by making more aggressive price cuts than it has managed so far.

After hearing a report from the government's broadband taskforce, Douglas Alexander demanded that the UK's incumbent telecoms operator followed the likes of ntl and Telewest, who he said have taken the lead in offering high-speed, fixed Internet services in the UK. Insisting that both BT Wholesale and BTopenworld cut the cost of their ADSL products, Alexander said that BT has an obligation to advertise the benefits of Broadband Britain to the UK public.

"The challenge for BT is to follow the example of the cable companies in setting fair prices aimed at bringing broadband to the mass market. Not just in their retail offerings, but in wholesale too -- so that the 180 resellers of BT's ADSL services can help drive the market," said Alexander, who was promoted to e-commerce minister within the DTI back in June.

Alexander's predecessor, Patricia Hewitt, was criticised by a committee of MPs for the problems of local-loop unbundling. The Trade and Industry select committee also slammed Oftel and BT.

BT Wholesale is the part of the company that sells broadband capacity to its retail arm, BTopenworld, as well as to rival ISPs. It has recently announced cuts in the monthly cost of ADSL, as well as a drop in the price of installation. But Alexander wants to see the telco go further.

Critics of BT have blamed the company for the fact that ADSL is too expensive, and only available in some parts of the UK. The company has recently announced technology that increases the distance over which an ADSL-enabled local exchange can offer broadband services -- which means that 60 percent of all households could now in theory receive broadband.

The Broadband Stakeholder Group was set up in February this year by the former e-commerce minister Patricia Hewitt and the e-Envoy, Andrew Pinder. Its role is to advise the government how to facilitate the rollout of broadband and higher bandwidth services across the UK. The group's executive body consists of nine senior IT executives including Peter Radley, chairman of Alcatel, Jeremy Beale of the CBI and Jim Norton of the Institute of Directors.

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