BT to slash broadband costs

BT hopes to 'kick-start' take up of high-speed internet

British Telecom plans to unveil big cuts in the cost of broadband internet services in the UK on Tuesday.

Broadband internet services enable users to download audio and video much faster than a normal phone line.

We need to underwrite broadband Britain

Ben Verwaayen, BT Group chief executive

BT's chief executive, Ben Verwaayen, said just over a fortnight ago the telecoms firm would slash the cost of access to its broadband services.

"Broadband is one of our major priorities going forward and our new chief executive has made that very clear," the spokesman said.

"He will be announcing significant price cuts [on Tuesday] and we hope that will kick-start the take up of broadband."

Prices to drop by a quarter?

At present, BT's high-speed internet services in Britain cost around £40 a month, which analysts view as more than most consumers are willing to pay.

The cable companies NTL and Telewest offer broadband access for about £25 a month.

Ben Verwaayen says broadband is "a major priority"

The BT spokesman declined to give further details of the price cuts ahead of the formal announcement.

But a report in the Sunday Times newspaper said BT would cut the wholesale price it charges to internet service providers (ISPs) to less than £20 a month.

This, in turn, would enable ISPs such as Freeserve and AOL to cut their monthly subscription fee to consumers to less than £30 a month, the paper said.

High-speed future

The BT chief executive said earlier this month there was a need to "underwrite broadband in Britain".

Prime Minister Tony Blair has set out a vision of "broadband Britain", to be achieved by 2005.

Britain has lagged behind other developed countries in the take-up of broadband services, with many critics blaming the level of BT's charges for the slow progress.

Freeserve, a frequent and forthright critic of BT's slow roll out of broadband lines, has welcomed the price cut proposal.

'Supportive'

"We have been wholly supportive of any plans to drive down the wholesale price [of broadband lines].

"That will increase the potential customer base which we can drive on to broadband", Freeserve said.

Freeserve has more than 2.4 million conventional internet customers in the UK, while BT Openworld has about 1.5 million.

BT has restructured itself over the last year to trim its once-crippling debts.

Last November, it spun off its mobile phone operation BT Cellnet into a new company which has been renamed MMO2.

Profits for the October to December period of last year were £381m excluding one-off items, slightly better than analysts had expected.