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Tuesday, 26 June, 2001, 16:57 GMT 17:57 UK
BT mulls higher high speed prices
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BT might want more of this from you
By BBC News Online technology correspondent Mark Ward

Despite recent denials BT has revealed that it is considering increasing the cost of high-speed net access.

Only last month the telecoms giant declined to comment on speculation that it would soon be asking consumers to pay more for broadband access to the net.

Now it says it is rethinking its charging plans thanks to "fundamental flaws" in the economics of running a broadband business.

Net connection company Freeserve has already hiked its broadband prices.

Cost equations

The chief of Openworld, BT's retail internet business, admitted this week that it is thinking about raising the price it charges for its current Asymmetric Digital Subscriber Line (ADSL) service.

Like almost every other company offering an ADSL service, BT Openworld resells high-speed lines supplied by another wing of the telecoms firms called BT Ignite.

Currently BT charges 40 a month for its ADSL service and it is thought to have about 35,000 customers.

But now Andy Green, Openworld chief executive, said that economic reality and the law was forcing it to think again, and could mean a price rise in the near future.

He said that Openworld had not secured the e-commerce and advertising revenues it had been expecting leaving it with a hole in its business that only higher charges could fill.

He said the situation was also being forced by legal constraints on BT that do not allow it to sell services at a loss because of fears that this could limit the chance other companies have to compete.

Mr Green said that last year BT Openworld lost 227m on turnover of 167m. In a bid to stop the rot it has cut its workforce by a fifth and plans to reduce costs by 100m this year.

But Mr Green admitted that any price hike could limit its ability to compete with companies such as Telewest and NTL which already offer high-speed cable modem access for 25 per month.

"If they've got their sums right, they will gain a large amount of the market," said Mr Green.

Last month Freeserve increased its prices by 10 per month.

At the time it said it was forced to take the action because it had no faith that either the government or BT could drive down prices to a level that would make it much more attractive to consumers and businesses.

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See also:

17 May 01 | Business
BT stonewalls on broadband charges
16 May 01 | Business
Freeserve hikes broadband prices
19 Jan 01 | Sci/Tech
High speed go slow
03 Apr 01 | Business
UK behind in broadband race
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