Operator tries to block BT broadband price cuts

Internet users may welcome a cut in the cost of ADSL, but a BT rival believes it will be curtains for competition in the wholesale market
Written by Graeme Wearden, Contributor

Any moves by BT to cut the price of its wholesale broadband service will be fiercely opposed by other companies who claim it is trying to force them out of the DSL market.

BT is expected to soon announce significant cuts in the price of its wholesale ADSL product. Bulldog Communications, which plans to install its own equipment in BT's local telephone exchanges and sell services to ISPs in competition with BT Wholesale, has already called on Oftel to launch an investigation.

Bulldog believes that any cuts in the price of BT's broadband product would constitute predatory pricing -- an attempt to make it impossible for it, and other telcos, to compete with BT Wholesale.

Under local-loop unbundling (LLU), companies can place their equipment in or near a local exchange and provide services such as broadband to ISPs, who then resell them to customers. LLU was supposed to bring in competition at the wholesale level of broadband, but Bulldog believes that BT is attempting to drive rival DSL operators out of business.

"BT is seeking to crush its DSL competition before it can even obtain a foothold," claimed Richard Greco, chief executive of Bulldog. "Oftel must act to stop BT from setting prices that will enable it to establish a monopoly," Greco added.

Cable & Wireless claimed this week that earlier BT Wholesale broadband price cuts were a factor in its withdrawal from the LLU process.

BT is not allowed to sell products at a loss, and Oftel can force it to cancel a price cut if the regulator believes the company is acting in an anti-competitive manner.

Oftel, however, is likely to face uproar it if blocks a BT ADSL price cut. BT has faced repeated criticism for not charging less for broadband from the likes of AOL and the e-commerce minister.

According to Bulldog, though, if Oftel doesn't take action, it is accepting the death of competition in the wholesale DSL market and allowing BT to build up a monopoly position.

BT chief executive Ben Verwaayen is expected to reveal details of the new broadband strategy on Thursday.

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