BT to drop wholesale prices in summer

UK telco BT said Monday that it intends to reduce wholesale broadband pricing once 1.5 million lines have been unbundled. Last week the operator reported that over 1 million lines have already been unbundled.

The new prices, which are intended to come into effect from May 2007, are intended to give service providers an alternative to unbundling local lines.

The rental charge for the most highly used wholesale broadband product – BT IPstream – will be reduced by 9 per cent, coming down from £8.40 per line per month to £7.63. A second round of reductions are planned for January 2008.

A cessation charge is also set to be introduced for service providers ordering the termination of service on an end user’s line. This charge of £33.75 reflects the input costs from Openreach, BT said.

The cessation charge will not apply when a consumer wants to move from one service provider to another which uses the MAC process, with the aim being to encourage more service providers to participate in the MAC process.

Cameron Rejali, BT Wholesale managing director for products and strategy, said: “These pricing proposals will help our ISP customers develop their business plans and compete effectively in the broadband market. The proposed prices better reflect the economies of scale and input costs we face, meaning we can deliver lower average costs to ISPs.”

BT Wholesale also said it intends to trial ADSL2+ technology in selected exchanges across the UK from the summer of 2007 as part of the upgrade to its 21CN. With planned speeds of up to 24Mbps, ADSL2+ is set to be available to almost half the UK from early 2008, with nationwide coverage linked to the rollout of 21CN.

But the news caused concern among the service provider community. A Tiscali spokesperson said that “without a review of Datastream pricing the new wholesale IPStream pricing must surely fail the margin squeeze test determined by the regulator to encourage deeper competition.

“In addition it is hard to understand and justify the new £33.75 cease charge, when it has never been levied before,” Tiscali said.