Oftel approves BT's broadband price cuts

Oftel said on Thursday morning that it will not block the price cuts for wholesale broadband that BT had announced will start next week.

The telecoms regulator decided not to intervene after it concluded that the substantial reductions were achieved through cost savings. Had Oftel decided that BT would be selling its broadband products at a loss then it could have forced the telco to raise its prices -- a move that would have thrown the UK's ISP sector into massive confusion.

The announcement is a green light for cheaper broadband in the UK -- and means that Internet Service Providers (ISPs) can offer broadband to home users for less than £30 per month. Some ISPs have already said that their consumer broadband will be as low as £23 per month. Such low prices are expected to stimulate heavy demand for high-speed Internet services.

BT's price cuts -- which saw the wholesale price of its consumer ADSL product fall to £14.75 per month, were announced late last month -- and Oftel director general David Edmonds said in a statement that his organisation has examined the new prices closely.

"Oftel has found that BT's price reductions reflect the significant cut in network and provision costs that BT has managed to achieve in order to bring wholesale broadband Internet prices down. BT can pass these cost savings on to ISPs, who in turn can reduce their own retail prices for broadband Internet access to consumers," Edmonds said.

BT is not permitted to sell its products at a loss -- a restriction that is meant to prevent it competing unfairly with other telcos.

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