BT rival welcomes broadband price cuts

Tele2, which sells wireless broadband services in several of Britain's urban areas, has welcomed the news that BT is planning to substantially cut the price of its wholesale broadband products -- even though the move would help its competitors.

Elliott Mueller, Tele2's chief executive, believes that such a price cut would be good for his firm because it will improve the public's awareness of broadband.

According to Mueller, when one high-speed Internet service provider reduces its prices, or launches a new marketing campaign, it helps everyone in the sector. "Tele2 benefits when other companies come out with a price cut, or an innovative offer, because it helps the overall awareness of broadband. We'd welcome a cut in BT's broadband pricing," Mueller told ZDNet UK.

BT's new chief executive, Ben Verwaayen, told journalists last Thursday that BT will announce a new broadband strategy within weeks. Significant price reductions are widely expected, although the BT press office has played down talk of a 50 percent cut in the wholesale price of ADSL.

Tele2 has launched its wireless broadband networks in cities such as Reading, Leicester, Nottingham, Bradford and Bristol. It has around 2,600 customers so far, and believes that growth will be driven by word-of-mouth -- once potential customers realise the benefits of high-speed Internet access.

"We're already getting a lot of referrals from existing users. I'm confident that we will pick up a lot more customers in the coming months once people learn more about broadband," Mueller predicted.

Other BT rivals are less pleased by the thought that BT Wholesale will cut its prices.

Bulldog Communications, a company that hopes to install its own kit within local exchanges and sell wholesale broadband services to ISPs in competition with BT, has already complained to Oftel about the idea. Bulldog believes that any further cut in the price of wholesale ADSL would make it impossible for rival operators to compete.

"BT is seeking to crush its DSL competition before it can even obtain a foothold," claimed Richard Greco, chief executive of Bulldog, last week.

Greco's comments did not receive a great deal of sympathy in the media, as many in the industry feel that getting low broadband prices soon is more important than ensuring that BT Wholesale has effective competition in the local loop.

Mueller suggested that both issues are important. "Having more competition at the wholesale level will be good for customers in the long term," he said.

As well as planning to install several new masts in Birmingham over the coming weeks, Tele2 is also offering to install its network in any part of the UK where 100 businesses are prepared to sign up.

It is also giving some customers one month's free trial. The offer is available to those living in Bath, Basingstoke, Birmingham, Bristol, Crystal Palace, Guildford, Sheffield, Slough and Uxbridge.

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