Broadband migration charges chopped

Prices could fall now that it costs less to move a customer between wholesale broadband packages

BT is cutting the cost of moving between its two main wholesale broadband products, following a recommendation from the communications regulator.

Ofcom said on Wednesday that BT should cut the price that it charges rival telcos to move customers from its standard IPStream broadband range to Datastream, which gives rival carriers greater control over customising their broadband offerings.

The move is part of Ofcom's drive to bring more competition to the UK broadband market. BT is following the regulator's line by cutting the cost of moving a customer from a BT IPStream-based service to one based on BT DataStream to £11 per end user from £50 from 1 May.

"Migration charges can be an obstacle to fair competition," said Ofcom chief executive Stephen Carter, adding that the new prices should mean that migration is less of a hurdle.

The move will mean considerable savings for Datastream operators, but some have insisted that still further reform is needed.

"We welcome the fall in IPStream to DataStream migration charges," said the Broadband Industry Group (BIG), a collection of BT rivals, in a statement.

"Nevertheless it will have little significance without a fair wholesale margin and efficient bulk and individual migration processes. The Group will only truly recognise success when a level regulatory playing field that allows real wholesale competition is achieved," said the group.

Energis, one of BT's fiercer critics, warns that it is still tricky for operators to move a customer onto Datastream.

"Whilst today's announcement is significant, it's fundamental that we see the delivery of a fit for purpose migration process - as well as sufficient and sustainable margins for Datastream," said John Pluthero, chief executive of Energis.

"This is a step in the right direction towards wholesale broadband competition - but there is still a long way to go."

Analysts believe that many carriers will pass the cost savings on to customers.

"Broadband is all about price differentiation at the moment; if the competitors can offer a broader range of products at a lower price they'll jump for it," said Andrew Darley, analyst at ING Financial Markets.

Ofcom also released details of its strategic review of the UK telecommunications market on Wednesday. One issue under consideration is whether BT should be split up.

Reuters contributed to this report