No more plans for DSL price cuts, says BT

Plenty of other tricks up sleeve...

BT Wholesale has no plans for further price cuts, according to CEO Paul Reynolds. BT won headlines and plaudits this February with its audacious decision to slash the price it charges ISPs for DSL broadband internet access, from £25 to £14.75 per month. The move allowed many ISPs to cut the prices they charge consumers to below £30, stimulating a massive upsurge in demand. One of the biggest factors that made the move possible was a fall in the cost of DSLAMs, the switching gear that BT has to put into local exchanges to convert phone lines for DSL. DSLAM prices are still falling, but BT has no plans to cut wholesale DSL prices, according to Reynolds. He said: "DSLAM technology is getting a higher roll-out so we would expect to be able to squeeze prices further." However, he argued that cheaper DSLAMs would increase the number of exchanges that could be enabled for broadband cost-effectively, so there would be some benefit for the consumer, in terms of wider availability if not cost. He said: "We will pass that on to the consumer in terms of wider footprint, but we have no plans to cut wholesale DSL prices as yet." This is despite the fact that BT Wholesale actually enjoys relatively high margins for its DSL products - higher, in fact, than its FRIACO flat-rate dial-up narrowband internet access products. Reynolds also announced BT Wholesale's target of controlling 50 per cent of the broadband market by next summer. Its market share is currently around 36 per cent, according to the latest Oftel figures. BT Wholesale has no plans to follow Telewest's announcement earlier in the week and launch a 1Mbps product aimed at consumers, said Reynolds, though BT does offer 1Mbps products for the business market. BT is instead looking at enabling the DSL network for other services, including authentication and video. Said Reynolds: "I am not saying broadcast, I am saying video-enabled. I am not talking about replicating Sky's TV network." Ian Morfett, managing director of strategy and business at BT Wholesale, said BT is also looking at building an authentication system into the intelligence layer of the network, which would then be made available to ISPs as a platform for secure ecommerce services.