BT unimpressed over probe into ADSL price cuts

Insiders say that the telco isn't happy about being forced to justify price cuts to Oftel at a time when it is also being blamed for the high price of broadband
Written by Graeme Wearden, Contributor

Insiders at BT are understood to be less than amused by the news that Oftel is investigating a recent cut in the cost of ADSL installation.

The regulator is looking into BT Wholesale's decision to install ADSL for £75, rather than the usual cost of £150. This offer will run until the end of 2001, but Oftel is concerned that this deal might not be acceptable. According to the regulatory framework, BT must make a profit on every broadband service it offers.

Officially, BT is "fully cooperating" with this investigation, and has handed over the relevant paperwork. In addition to BTopenworld, at least 180 other ISPs buy wholesale ADSL capacity from BT.

Sources, however, have told ZDNet UK News that the telco is exasperated by this intervention from Oftel -- at a time when its critics are lining up to have a pop at it for charging too much for broadband. "On one hand, we're told that it is our fault that broadband costs too much, but whenever we cut the prices we face investigation," said one insider.

An Oftel spokesman said on Monday that its concern was that ADSL pricing should not be anti-competitive.

In a speech last month Sir Peter Bonfield, chief executive of BT, said that the current regulatory structure makes it hard for BT to reduce broadband costs.

"We reduced our wholesale ADSL offering from £35 to £30 per month recently," Bonfield said. "Some people in government welcomed this, but then Oftel started saying 'hang on, this could be unfair pricing'. So, BT is accused of setting its prices too low, and also criticised for charging too much for ADSL."

In contrast, cable companies aren't governed by such regulation and can, in theory, offer broadband for an attractive -- but non-profitable -- price. Ntl customers can get broadband Internet access for £25 per month, while BT's home offering costs £39.99 per month.

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