BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Tuesday, 26 February, 2002, 15:17 GMT
Telecom industry cheers cheaper broadband
The next challenge will be filling the screen with content
Internet service providers (ISP), content providers, regulators and politicians have all welcomed BT's decision to cut wholesale broadband access charges from 25 to 14.75 a month.

The ISP Pipex responded quickly by cutting its broadband cost to 23.44, that is 19.95 plus VAT.

"We expect to see mass take up of broadband in the UK over the coming months," said managing director David Rickards.

"This is a very positive announcement which we welcome," said Karen Thomson, chief executive of internet service provider AOL UK.

"We are presently examining the details," she added.

"But it is already clear that this takes us much closer to the dawn of broadband Britain."

Content is key

Gary Baker, marketing director of Alcatel UK, which offers broadband hardware, said lower wholesale prices from BT "gives room for ISPs to compete with the propositions from Telewest and NTL."

"Beyond that, we expect new application and content to be the main drivers for high level penetration."

Broadband retail prices, European comparisons:
BT Openworld: 55.11 euros
Telecom Italia:
42.87 euros
Telefonica (Spain):
42.04 euros
Telia (Sweden): 28.08 euros
Belgacom (Belgium):
25.10 euros
France Telecom:
17.15 euros

Source: Point Topic

Simon Hockhauser, whose company Videonetworks offers music videos, movies and TV programmes via the web, agreed.

"We need broadband to [do our business] and the prices of broadband have held us back over the last four to five years," he told BBC News Online.

Industry officials predict that along with rising broadband penetration there will be a sharp rise in content supply.

Last Friday, Ireland Live Television News launched what it claims to be the worlds first 24-hour broadband news channel.

BBC News Online is also developing a wide range of multimedia services for broadband.

Price competition

"The cost of broadband is clearly an important factor in take-up and [BT's] price reductions proposed are very significant," said the industry regulator Oftel's director general of telecommunications, David Edmonds.

Ian Buckley, marketing manager of ISP Zen Internet, said lower prices were key to attract new customers.

He referred to market research that indicates that consumers in the UK are willing to pay between 25 and 30 a month.

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

Freeserve said it would offer broadband internet access for 29.99 a month to its existing customers from 1 April.

The smaller ISP Nildram, meanwhile, cut the prices for its relatively slow broadband connection to 29 a month two week ago, taking a lead.

The company says it will make an announcement shortly how to react to BT's price cuts.

The ISP Affinity also welcomed BT's move, though its chief executive Wayne Lochner said BT should have reduced wholesale prices even more to below 10.

BT's retail price

BT's own broadband service did not immediately cut its monthly retail charge of about 40.

But the price is widely predicted to come down.

This is expected to make BT Openworld's broadband service cheaper than those offered by some of its European counterparts.

The UK's e-commerce and competitiveness minister Douglas Alexander welcomed BT's lower wholesale broadband prices, describing the move as "excellent news for consumers and business".

Broadband cable

The UK cable companies NTL and Telewest Communications have grabbed large chunks of the broadband market by offering high-speed internet access for 25 a month.

"We're pleased that BT finally decided to push [its broadband service] aggressively. Competition will be good for us as it will help drive [demand for broadband] forward," said Telewest chief executive Adam Singer.

At the end of September, the two had 170,000 customers, more than BT at the time.

Industry officials have estimated that the figure is believed to have risen to about 250,000 since.

See also:

26 Feb 02 | Business
BT to slash broadband costs
07 Feb 02 | Business
BT plans cheaper broadband
04 Feb 02 | Business
Broadband too dear, say Europeans
05 Feb 02 | Business
MMO2 plans further job cuts
14 Jan 02 | Sci/Tech
Will 2002 be the year of broadband?
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories