The cost of broadband Internet packages could drop early next year, after BT Wholesale announced today (Wednesday) that it is aiming to start selling self-installation ADSL equipment by January 2002.
The company will begin trials of the do-it-yourself broadband kits on 3 December. If successful, the commercial rollout will begin a month later. The product could mean a £5 per month saving on the price of broadband, and a significantly smaller installation cost. BT announced the market trials at a briefing in a local telephone exchange in Battersea.
The kit consists of a small device that will fit directly into a phone socket and split the ADSL connection from the telephone, and a broadband modem -- which will link to a PC via its USB port.
Currently, an engineer must visit every new ADSL customer to modify their phone socket so that it can split data from voice traffic. With the plug-and-play option, customers will be sent the package by post, and BT Wholesale believes that this method will help to reduce overheads.
"By cutting out the need to send an engineer round to each customer's premises, we remove a large part of the installation process and thus cut out costs," said Bruce Stanford, BT's director of broadband.
Although BT Wholesale has developed the product, it will actually be sold to consumers by ISPs who buy ADSL capacity from BT. Speaking at the launch event, BT's Rebecca Webster said that she was hopeful that these companies would pass the saving on to BT.
According to Webster, the wholesale cost of the DIY product will be £25 per month, compared to the current price of £30 per month. There will also be an installation fee of £50, to cover work that must be done at the local exchange end of the customer's connection. This is cheaper than the £150 fee for installation when an engineer visits the home -- although BT has halved this fee to £75 for the rest of this year.
BT Wholesale is also planning to allow the ISPs who buy its broadband products to source their own ADSL modems. At the moment, BT Wholesale sells this equipment, and under its regulations it is not allowed to subsidise this cost. "As well as giving ISPs more choice, it removes one of our costs. It allows operators to strike deals with whichever manufacturer they choose, and allows them to absorb the cost if they wish," said Webster.
BT must make a profit on every product it sells -- an attempt to stop it winning market share through "unfairly low" pricing. Part of Oftel's job is to make sure that BT's pricing doesn't harm competition in the telecoms industry.
This has recently led to annoyance within BT after Oftel began investigating the £75 broadband installation offer. One BT insider told ZDNet that it seemed unfair that the telco was blamed for the high price of broadband, but investigated whenever it tried to lower it -- comments also made by BT's chief executive Peter Bonfield when he delivered the 2001 Hilton Lecture.
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