BT resists calls for cheaper business broadband

SDSL pricing needs to be cut dramatically in order to stimulate demand, say analysts. But BT is not convinced

Business broadband prices need to fall by a third in order to encourage many more small firms to sign up for a high-speed Internet connection, Datamonitor claimed on Thursday. But BT -- which launched its Business Broadband Advanced SDSL service last month -- played down the suggestion that prices should be dramatically cut.

In a report into Britain's evolving business broadband market, Datamonitor said the cost of services such as SDSL (symmetrical digital subscriber line) products must be reduced significantly to boost take-up and create a mass-market business broadband sector to mirror Britain's booming consumer broadband market.

"There is still a huge opportunity in the SME sector for providers to offer broadband access. However, prices need to come down further to gain a critical mass in uptake," said Datamonitor business analyst Caroline Bryan. "The industry has seen a steep price decline of around 50 to 60 percent for xDSL equipment in the last 12 months. It is now up to operators to pass these savings on to the customer to increase xDSL implementation."

As SDSL provides a two-way high-speed connection, it is suitable for businesses who want to both send and receive data quickly. Some larger firms are achieving significant cost savings by replacing their existing leased lines with SDSL.

Bryan told ZDNet UK that a cut in the wholesale price of SDSL of "at least 30 percent" is needed to get more companies on board, in particular the smallest UK firms. It is estimated that over half of companies with fewer than 50 employees are still using a narrowband connection.

BT is one of several telcos that offer SDSL services in Britain. "As with any product, the price of our SDSL services depends on a number of factors, including the cost of developing the service and delivering it, and the state of the general marketplace," explained a BT spokesman.

BT won't disclose whether the cost of xDSL equipment has fallen by as much as 60 percent over the past year, but pointed out that backhaul connectivity is often the main factor in broadband pricing.

"It's fair to say that the equipment is not the major part of the cost. It's just one factor," the BT spokesman explained.

After the success of its ADSL price cuts in 2002, and again in 2003, BT isn't ruling out cutting the cost of SDSL, though.

With BT's Business Broadband Advanced, a 500-kilobit-per-second (Kbps) SDSL connection will cost £170 per month, compared to £345 per month for a two-megabit-per-second (Mbps) link. In addition, there is a one-off £595 connection charge.