Uncertainty clouds broadband price cuts

UK telecommunications regulator Oftel has not yet decided whether or not to approve the wholesale broadband price cuts that BT announced last month and that are due to come into effect on 1 April.

BT wants to cut the wholesale price of its full range of broadband packages, including slashing the cost for ISPs of its consumer high-speed Internet product to £14.99 per month. This would allow Internet Service Providers to sell broadband services for less than £30 per month, and some ISPs have already promised to go as low as £23 per month.

Such prices would provide a significant boost to the take-up of high-speed Internet services, and BTopenworld has already reported a big jump in customer numbers since the price cuts were revealed.

But the changes still have to be approved by Oftel, though, who must be satisfied that BT is not trying to force rival broadband providers out of business by selling at a loss. It has been aware of BT's plans for more than three weeks, but has not yet decided whether to approve them or block them.

An Oftel spokeswoman told ZDNet UK that the regulator was still examining BT's price cuts. "We've obviously got to look into them. There's no further update at this stage -- it's a case of watch this space," she said.

Although Oftel has the power to stop BT's cuts, it cannot prevent the company from implementing them while it ruminates.

With this in mind, pretty much every ISP that buys its broadband from BT has announced a change in its pricing, with some having already implemented the cuts -- even though BT Wholesale's pricing won't come down until next month.

"If Oftel did block the cuts it would complicate the situation, both for us and for the ISPs. Plenty of people would be hitting the calculators," a BT spokesman said.

Oftel's initial reaction to BTs cuts was that they would probably be approved, leading to suggestions that BT had discussed its plans with the regulator ahead of last month's announcement.

"We're confident that we've done our homework. We're happy for Oftel to take its time making a decision, and we expect that they'll approve the cuts," said the BT spokesman.

Should Oftel go the other way, and conclude that BT is acting in an anti-competitive manner, it will provoke an almighty row, involving the 200 or so ISPs that resell BT Wholesale's broadband, the government, and BT itself.

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