UK Internet Service Provider Freeserve has accused BT of engaging in a range of anti-competitive practices in an attempt to dominate the broadband Internet market, and has called on industry regulator Oftel to take action.
In a strongly worded statement released on Wednesday, Freeserve claimed that rival ISP BTopenworld had received advanced notification of the wholesale broadband price cuts that BT made in February. BT could be in hot water with the regulator if this charge is proven, as the telco is not permitted to give preferential treatment to BTopenworld over rival ISPs.
Freeserve believes that BTopenworld must have been tipped off that BTwholesale was planning to slash its wholesale broadband prices, as within weeks the ISP had announced a £10m advertising campaign and arranged a massive distribution campaign for its broadband installation CDs.
"These announcements and activities demonstrate that BT Openworld must have received advanced notification of the wholesale price cuts with a view to positioning themselves within the market, ahead of the competition", claimed Freeserve, who want Oftel to discover exactly when these campaigns were fixed up.
Oftel has confirmed that Freeserve has made a formal complaint. "We're meeting them shortly to discuss their concerns," said an Oftel spokeswoman.
BTopenworld has denied that it had any prior knowledge of the price cuts announced by BT's new chief executive.
"Ben Verwaayen had clearly indicated that there would be a substantial price cut some weeks before the final details emerged. We created several models based on different levels of price cuts, so we were ready when the announcement was made," explained a BT spokesman who also pointed out that several ISPs, including Freeserve, had announced their new broadband prices before BTopenworld.
The BTopenworld spokesman added that its new television broadband adverts were based on an earlier cinema advert, and that it had been possible to announce its broadband CD distribution plans quickly because it had many existing relationships with stores. "Not much of our marketing plan was completely from scratch. Most of it was either already in the pipeline, or in a different format," he said.
Recent adverts placed by BT to promote broadband have also attracted Freeserve's fury. The ads direct readers to www.bt.com/broadband, which contains a list of 54 ISPs - including Freeserve - that will sell ADSL to consumers. Freeserve believes the ads are unfair, though, because the main www.bt.com site only provides links to BTopenworld's products.
"The positioning of the BT advertisements is grossly misleading when one considers that BT.com provides a direct link to BT Openworld with no reference to DSL products available from other competing ISPs," said Freeserve in its statement.
Despite the fact that there doesn't appear to be a link from the broadband pages to BT's main site, Freeserve is adamant that the ads are unfair. "The effect of this advertising is to make BT synonymous with DSL to the exclusion of other service providers," claimed Freeserve.
Freeserve has also asked Oftel to investigate a special offer that BTopenworld is currently running that lets new broadband subscribers avoid paying a £65 connection charge.
"We believe the matter to be so critical that OFTEL should consider drawing on its powers under the Competition Act to conduct an immediate cross subsidy/predatory pricing investigation in order to prevent BT securing an unassailable position in the market place," fumed Freeserve.
In response, the BTopenworld spokesman insisted that the ISP was not receiving any financial assistance from the main BT Group to help it to spare new customers the £65 activation fee.
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