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Tuesday, 26 February, 2002, 07:15 GMT
BT cuts broadband charges
Computer user, BBC
BT hopes to 'kick-start' take up of high-speed internet
British Telecom has unveiled big cuts in the cost of broadband internet services in the UK.

Broadband wholesale prices, European comparisons:

24.75 euros (down from 48.58 euros)

Telecom Italia:
35.75 euros
France Telecom:
30.19 euros
Telefonica (Spain):
22.86 euros
Belgacom (Belgium):
21.34 euros
Telia (Sweden):
12.96 euros

Source: Point Topic
The telecoms company will cut the cost of wholesale broadband access for internet service providers from 25 to 14.75 from 1 April.

This should lead to sharp cuts in the prices end users pay. The internet service provider Pipex responded to BT's move by cutting its broadband charges to less than 20 a month before VAT.

Many of its competitors are expected to follow suit shortly.

The UK has one of the lowest take-up rates for broadband access in Western Europe, and high wholesale broadband prices have been blamed for this.

"We have now achieved the price that service providers told us they needed to get end user prices below 30," said BT Wholesale chief executive Paul Reynolds.

Broadband retail prices, European comparisons:
BTopenworld: 55.11 euros (though expected to come down)
Telecom Italia:
42.87 euros
Telefonica (Spain):
42.04 euros
Telia (Sweden): 28.08 euros
Belgacom (Belgium):
25.1 euros
T-Online (Germany): 25 euros
France Telecom:
17.15 euros

Source: Point Topic
"This is a very positive announcement which we welcome," said AOL UK's chief executive Karen Thomson.

"We can now offer broadband to consumers at a price that will drive high levels of take-up," said the chief executive of the internet service provider Freeserve, John Pluthero.

"This will drive the whole market forward by making broadband affordable, attractive and accessible," said BT chief executive Ben Verwaayen.

'Off-putting' charge structure

The investment bank JP Morgan was sceptical, pointing out that BT's decision to raise its engineer-installed connection charge by 40% to 210 would be "potentially off-putting for consumers".

The new charge applies only to consumer products, while connection fees for businesses remain at the old, lower level.

If consumers install the ADSL line themselves, the connection charge will be 50.

BT says that one-third of its sales to ISPs are currently self-install packages and expects that more people will take up this option.

Consumer prices

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

The price cuts are part of Mr Verwaayen's growth strategy
Prior to the announcement, BT Openworld's high-speed internet services to the consumer 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. BT's price cuts are part of Mr Verwaayen's growth strategy.

"Broadband is the future for Britain and we're putting it at the heart of BT's plans for growth in the UK mass market," he said.

Blair's vision

BT aims to attract one million subscribers for its ADSL, or asymmetric digital subscriber line, broadband network by summer 2003.

To do this, it will launch a major marketing campaign together with more than 40 service providers "to champion the benefits of broadband", BT said.

BT will also search for partnerships "to extend broadband to less commercially viable areas", it said.

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.

The BBC's Rory Cellan Jones
"BT has been blamed for the delays"
Ben Verwaayen, Chief Executive of BT
"We haven't bowed to pressure"
See also:

04 Feb 02 | Business
Broadband too dear, say Europeans
14 Jan 02 | Sci/Tech
Will 2002 be the year of broadband?
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