Broadband pricing row ignites

Should Oftel force broadband prices down even lower? One ISP thinks so, but the regulator isn't biting

A UK Internet Service Provider has accused Oftel of failing to push for lower broadband prices for consumers -- a charge the telecoms regulator has batted away.

PlusNet, which offers a full consumer ADSL package for £21.99 including VAT per month, has written to Oftel to complain that more ISPs aren't offering broadband at similar prices, but are instead sticking to prices of around £28 a month and above.

"Household-brand ISPs in this country are selling ADSL at £28 per month and above, when it is more than possible to deliver high quality, lower cost ADSL solutions," said Marco Potesta, commercial director of PlusNet, in a letter sent to Oftel last week.

"Oftel must intervene and ensure that prices are not maintained artificially high as a result of consumer ignorance and large brand price apathy towards their customers," Potesta insisted.

The regulator, though, says it has not received a formal complaint from PlusNet, and is not planinng to investigate broadband pricing in the UK.

"According to our compliance department, no formal complaint has been received," an Oftel spokeswoman told ZDNet UK News.

There is a considerable gap between the cost of broadband from a major ISP, and from one of Britain's smaller operators -- although comparisons can be difficult, with some ISPs also subsidising the cost of an ADSL modem.

BT Openworld charges £29.99 per month for its consumer broadband package, with the first month's rental free. AOL Broadband costs £27.99 per month, with both the modem and the line activation charge thrown in for free.

In comparison, PlusNet has just launched a new product that -- like AOL's -- includes free modem and line activation, for £24.99 per month. As well as its standard ADSL Home product at £21.99 per month, PlusNet also offers a more restrictive ADSL Home Surf package which does not support peer-to-peer file-sharing or binary newsgroup access, for £18.99 per month.

According to a PlusNet spokesman, these broadband products are profitable despite being cheaper than rival offerings.

As price is a key differentiator between broadband ISPs -- who are generally all reselling the same BT Wholesale product -- it appears to be in PlusNet's interest for as many of its rivals as possible to charge more for their ADSL. It's certainly a situation that Oftel seems to be happy about.

"If a customer isn't happy with paying £28 per month for broadband they can go elsewhere," pointed out the Oftel spokeswoman. "The UK has a competitive broadband market, and it's a good sign that PlusNet are offering these lower prices," she added.