BT broadband price cut 'unlikely' to benefit consumers

The telco is poised to cut its monthly wholesale ADSL prices on Thursday, but there is concern that the saving will effectively be wiped out by other costs

BT is expected to announce a cut in the cost of wholesale ADSL as early as this Thursday, but sources suggest that the reduction may not result in significantly lower prices for consumers.

According to an insider familiar with the situation, BT Wholesale is poised to cut its monthly ADSL rental fee from £14.75 to around £13. If correct, this would be a saving of £21 per year.

Previous price cuts of this nature have usually been passed on to consumers by ISPs. However, there are concerns that on this occasion retail prices may not fall, as operators adjust to the fact that a popular half-price offer on the ADSL activation fee has just ended.

This reduced the up-front cost of getting broadband by £25, and there is disappointment within the ISP community that this special offer was not extended by BT.

BT is also understood to be planning a small rise of 10p or 20p per user per month in another charge levied on ISPs.

The upshot, it is believed, is that if BT does cut the monthly rental change by £1.75, ISPs will still be paying the telco more for the ADSL products that they resell to consumers than they were paying last month -- at least for the first year of a customer's time with them.

"Even if they do cut the monthly rental fee to £13, other price changes mean that BT have effectively given with one hand and taken away with the other," Jonathan Lambeth, head of corporate media relations at AOL UK, told ZDNet UK.

"We've appreciated previous offers and price cuts, but on this occasion we can't see how consumers will benefit," Lambeth warned.

ZDNet UK reported last week that Bruce Stanford -- director of wholesale products at BT -- had told a meeting of Internet Service Providers that BT was reviewing the prices of its wholesale broadband products.

BT later downplayed these comments, insisting that its prices are always under review, but it now appears that Stanford may have been attempting to gently warn ISPs that changes were imminent.

Many ISPs, especially smaller operations, have since received little or no information from BT about the issue, but some are hopeful that they will be able to pass on any savings to customers.

Iain Ogilvie, marketing manager at Nildram, believes that price has become more of an issue as the broadband consumer base has evolved.

"We've gone from selling broadband mainly to early adopters, who were prepared to pay £50 per month, to a position where the man on the street is aware and interested in the technology. Price is a more sensitive issue than before," Ogilvie explained.

BT declined to say whether an announcement was imminent, with a spokesman explaining that the company did not comment on rumours.

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