Broadband alliance takes aim at BT

Six British telecoms operators have banded together and are pushing for changes in wholesale broadband pricing, but BT denies there's a problem

Several telcos have formed an alliance to push for changes to the UK's broadband market, with tighter regulation of BT top of their list.

The Broadband Industry Group consists of Brightview, Cable & Wireless, Centrica, Energis, Freeserve and Tiscali. It is due to be formally launched next month, but it's already clear that the group is determined to keep alive the row over BT Datastream -- the wholesale product that lets telcos offer to ISPs broadband packages that run over their own backbone network but also use BT's last-mile copper connections to reach customer homes or businesses.

"Oftel should recognise that current regulation is hindering effective competition," the Broadband Industry Group says in a policy statement on its Web site. It demands that "conditions should be placed on BT about how they set the price of DataStream, its functionality and levels of customer service."

Several DataStream customers have recently claimed that BT is acting unfairly by charging excessively for Datastream, compared to the IPStream products that BT sells directly to ISPs. This row kicked off when BT made significant reductions in the price of its business IPStream products, without making similar cuts to its Datastream range. BT caved in and cut Datastream rates in May, and again last month, but a complaint over the issue is still being investigated.

The Broadband Industry Group wants BT to be forced to change the way it sets Datastream pricing -- a move it claims would see broadband prices fall for British businesses and consumers.

"We believe that effective competition could deliver 512kbps broadband for significantly lower prices than today, hugely increasing take-up," the organisation claims, adding that it would also make possible "affordable, corporate class, services for small companies, and low cost access for small sites and homeworkers to corporate networks."

BT, though, denies that the pricing of its IPStream and Datastream products prevents other telcos from offering profitable services.

"BT believes that Datastream pricing allows other operators plenty of room to compete in what is already a very competitive market," a BT spokesman told ZDNet UK on Monday. "Oftel monitors the balance between IPStream and Datastream pricing to ensure this is the case," he added.

The Broadband Industry Group is expected to reveal new research into the economic benefits of broadband at its launch event next month.

Some in the industry, though, are sceptical about the alliance's chances, suggesting that its members may disagree over what broadband actually is. While the Broadband Industry Group's Web site talks about "512Kbps broadband", Tiscali's entry-level "broadband" product is just 150Kbps -- which has raised the hackles of some of its rivals.

A Broadband Industry Group spokesman told ZDNet UK that both speeds were "technically both broadband services", but agreed that many of the classic broadband applications need a higher bandwidth to work effectively.