ADSL pricing: industry reacts

Not as bad as expected, BT's ADSL pricing gets mixed reaction, but Freeserve reckons it's far too expensive

Industry reaction to BT's ADSL pricing announcement Thursday has been a mixed bag -- ISPs appear underwhelmed while observers expressed relief, having thought the service would be more expensive.

ADSL (asymmetric digital subscriber line) has been something of an albatross around BT's neck in recent months, with speculation it would charge as much as £100 per month for the service. The announcement it will charge ISPs a single connection fee of £150 plus a wholesale rental price of £35 a month has surprised some of its critics.

Huw Saunders, technology director at indepedent telco Kingston Communications, summed up the attitude of many. "It doesn't sound too bad and is a lot better than previous indications. It is not ridiculous but it is slightly high," he said. Saunders thinks ISPs will put a markup of around £15 or £20 on the wholesale price, creating a consumer price of around £50 per month.

Saunders reckons consumers can look forward to ADSL prices of around £30 per month within two years.

Not all corners of the market were happy with the pricing though: Freeserve, the UK's leading ISP has big plans for ADSL and is not impressed. "I am not surprised by the prices but we would hope to see it come down lower," a spokesman for the company said. Freeserve believes the consumer price of £50 is at least double what customers are willing to pay.

While the industry mulls whether or not the pricing will ignite mass euphoria, Tim Johnson analyst with research firm Ovum, reckons Oftel should be praised for the work it has done to get BT down to the level it is at. "BT has been pressed by Oftel and there has been a lot of argument, forcing them lower than they wanted to go," he said. Johnson thinks unbundling of the local loop -- which will open up BT's network to other operators -- has also spurred the telco into action.

As Johnson praised the telecoms watchdog, he remained scathing of BT's approach to ADSL. "It has made a real mess of the PR and marketing of ADSL. It is an object lesson in how to get a negative return on a positive thing," he said.

Johnson vehemently disagrees with BT's chairman Iain Vallance who told delegates at the TMA conference in Brighton this week that ADSL is not ready for the masses. "That is simply nonsense. BT has been dragging its heels, moaning and groaning when ADSL is going like hot cakes in America and everyone who uses it is enthusiastic. He [Vallance] seems to have the attitude of 'don't tell me the future, I don't want to know'," he said.

Analysts agree that software downloads, streaming videos and online games will be the most important applications for ADSL and that how ISPs package the technology will be crucial to take-up. Kingston's Saunders advises ISPs to make sure their infrastructures are able to support ADSL. "It is not just about buying a big, high-speed pipe. That merely shifts the bottlenecks farther up the system. ISPs have got to put their hands in their pockets and build the infrastructure to support high-speed access."

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