BT's broadband price cuts could arrive by Easter

After a fortnight of speculation and rumour, BT will release details of significant reductions in the cost of its wholesale broadband products on Tuesday.

The price cuts are expected to cover both business and consumer products. BT can implement price cuts 28 days after notifying the industry, meaning that changes announced on Tuesday morning could come into effect by the end of March.

Oftel has the power to block price cuts if they are anti-competitive, but any investigation is likely to take longer than one month.

Ben Verwaayen, BT's chief executive, told journalists earlier this month that he was close to announcing a radical new approach to broadband. This announcement gave birth to a fever of gossip and guesswork, with some reports suggesting that the wholesale cost of BT's consumer ADSL product could be halved.

Speaking in advance of Tuesday's announcement, a BT spokesman told ZDNet UK it will include significant price cuts across the full range of BT's broadband products. Marketing initiatives and attempts to improve the consumer experience are also expected to feature.

The BT spokesman added that the changes will please the UK's Internet Service Providers (ISPs), who are expected to pass the saving directly onto consumers. ISPs typically charge around £40 per month for broadband. A significant cut in BT's wholesale ADSL product could allow ISPs to charge £30 a month, or possibly even less.

Many observers believe that broadband will only appeal to large numbers of people when its monthly cost falls to £25 or below.

Under industry rules BT is able to bring any new prices into effect 28 days after they are officially announced, so consumers should be able to benefit by Easter.

Any announcement made by BT runs the risk of being blocked by Oftel, if the regulator believes that the telco is selling its products at a loss in order to stifle competition.

As ZDNet UK revealed last week, however, Oftel is unlikely to be able to act in time. Oftel investigations typically take much longer than one month, and even if one was launched into BT's broadband price cuts within 28 days of their announcement, Oftel cannot prevent BT from implementing cuts until its probe is completed.

Have your say instantly, and see what others have said. Go to the Telecoms forum.

Let the editors know what you think in the Mailroom.