BT warned to play fair over broadband advert blitz

Telecoms watchdog Oftel has given a green light to BT's plans to distribute millions of pounds to British Internet Service Providers (ISPs) to subsidise their broadband advertising.

As reported by ZDNet UK News on Monday, many ISPs have already applied for a share of this fund. To qualify, they must be planning to launch advertising specifically for their high-speed Internet services.

The scheme is an attempt by BT to increase public awareness, and consequently the take-up, of broadband services in the UK -- which has been disappointing so far.

A spokeswoman for the regulator told ZDNet UK that Oftel had been aware of BT Wholesale's plan for some time, and warned that the company mustn't act unfairly by giving too much support to its own retail operations.

"BT is welcome to do this as long as it doesn't favour its own service -- BTopenworld -- over other ISPs. We were aware that BT was planning to offer the package, and we are satisfied that there aren't any direct regulatory concerns with it," the Oftel spokeswoman said.

ISPs have been able to apply for the assistance since December 2001, and BT is now deciding how to distribute the money. It is understood that the offer has been oversubscribed, so some companies are likely to be disappointed.

BT Wholesale sells ADSL services such as self-installation broadband, which are then resold to customers by ISPs. There are only around 100,000 ADSL customers in the UK, despite BT making over 1,000 local exchanges ADSL-enabled.

BT's incoming chief executive, Ben Verwaayen, will be under pressure to increase broadband take-up. He will start his new job next month, but has already been visiting BT's operations around Britain.

According to one BT insider, Verwaayen has been taking considerable interest in the issue of broadband and local loop unbundling (LLU) -- the process by which rival operators can install their equipment in or near a BT exchange and offer services in competition with BT Wholesale.

Verwaayen is understood to have insisted on spending several hours at Battersea local exchange earlier this month, being shown BT's ADSL equipment and learning about LLU.

Critics claim that a lack of public awareness is not the main reason for the disappointing take-up of broadband. The government has repeatedly called on BT to cut the cost of ADSL, so that the retail price could be closer to the £25 to £30 per month range that some in the industry believe is needed. BT insists that the regulatory framework means it cannot sell wholesale broadband any cheaper.

There is also the fact that around 40 percent of the population aren't lucky enough to be connected to an ADSL-enabled exchange.

BT does have cause to believe that advertising would help, though. The telco ran a broadband advertising campaign shortly before Christmas, and saw a significant increase in ADSL orders as a result.

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