Small ISPs 'face ruin' over BT price hikes

ISPs will face major problems due to price rises that BT plans for its wholesale offerings. The effects are likely to result in less choice for consumers -- particularly small businesses, says the ISP Association.

ISPA said on Friday that its members are concerned by a BT proposal to hike the price of its IPStream package by around 30 percent. ISPA's members claim this increase would put many of them out of business.

BT made the announcement on 3 August in anticipation, it is believed, of Ofcom's report published on Thursday.

Under Ofcom's direction, BT is only required to give its wholesale customers 28 days notice of such increases.

ISPA said its consultation showed that small and medium sized ISPs (SME ISPs) are likely to be significantly affected by the price increases. "Such an escalation implemented on this scale and in such a time frame may mean ISPs will be forced to charge significantly more for their services, diminish service levels or even close," the organisation said in a statement. "This would offer less choice of provider for end users, cause a negative impact on competition in the Internet industry and potentially cause SME ISPs to offer services that are not on a par with their larger competitors."

"Imagine a 32 percent increase on fuel," said an ISP spokesman. "IPStream for ISPs is like their fuel. If you did this to a transport company they would be looking at going out of business."

The problem is exacerbated, said the spokesman, because BT is only required to give 28 days' notice. "But imagine you're an ISP and you have customers on an annual contract paying a fixed rate. If you increase their costs by 32 percent you'll put them out of business. It's as simple as that."