Telewest has claimed it is happy that BT has cut its wholesale broadband prices, even though this move will bring ADSL products much closer to the cost of cable broadband.
Telewest subscribers can get high-speed Internet access for £25 per month. This has given the company a significant advantage over ISPs who had to buy their broadband from BT Wholesale at a cost of £30 per month, or £25 for BT's self-installation product.
The days of home users paying retail prices of £40 per month for ADSL will soon be over, though, now that BT has cut its wholesale consumer price to £14.75 per month. From 1 April, Freeserve and BTopenworld will charge customers £29.99 per month, while other ISPs will charge as little as £23 per month.
Telewest is upbeat, though. "It was getting hard building broadband Britain by ourselves, and it's great that BT has finally turned up to lend a hand," said Adam Singer, group chief executive of Telewest, in a statement. "So far, with our cable colleagues at ntl, we have connected more broadband customers than BT despite the latter's position as the dominant telephone provider in the UK," Singer added.
BT responded that it has done more than any other company to wire Britain for broadband, by widely extending ADSL availability. "We have brought broadband to exchanges that serve 65 percent of the UK population in a very short space of time, whereas other companies have concentrated their efforts on the major cities," said a spokesman. "Our product is also available to all ISPs on an equal basis, allowing them to reach this large percentage of the UK population."
BT is hoping to sign up one million ADSL customers by the summer of 2003, a target that should be easily achievable once AOL joins Freeserve and BTopenworld in launching a self-installation broadband product. The marketing muscle of the Big Three ISPs is seen as crucial in the task of persuading large numbers of people to embrace broadband.
Telewest believes that by offering a 1mpbs broadband product it can beat BT in the race to get Britain using broadband.
"We will emphasise our leadership in this market by rolling out a 1-megabit service later this year. This service will be 20 times the speed of dial-up and twice as fast as BT's DSL offering," Singer said. "Using the technical superiority of our cable network over DSL, we are going to play full-contact broadband with BT and will keep raising the speed till they run out of puff."
As subscriber numbers rise, however, the technical performance of cable-modems and ADSL is likely to play an increasing part in the choice consumers make. Critics of cable-based services like Telewest's say that it has a higher contention ratio than ADSL -- which would mean that performance declines faster when new users are added in a particular geographical area.
Cable companies argue that this issue can be dealt with by simply building more access points in an area. But building new infrastructure costs money, and users run the risk of being stuck with an increasingly sluggish service, critics say.
Telewest also gave evidence to the select committee of culture, media and sport this week. Singer told the assembled MPs that the government is failing to take advantage of broadband. He would like to see government departments putting broadband-optimised versions of their services online.
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