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Wednesday, 25 September, 2002, 14:55 GMT 15:55 UK
Freeserve slates BT's broadband plans
Tony Blair in House of Commons
Government has set tough targets for broadband
UK internet service provider Freeserve has warned that consumers could suffer if BT's controversial new broadband service goes ahead unchallenged.

BT has launched a multi-million pound advertising campaign to market its new direct access service which offers consumers stripped-down broadband for 27 a month.

The fact that it cuts out the need for an internet service provider has angered BT's rivals and Freeserve is convinced that it is anti-competitive.

While the new service may push the figures for broadband up in the short term, it will do nothing to help a competitive market and the cheaper prices that follow said Freeserve.

Government gift

It is particularly concerned that BT has been allowed to market the service to its existing telephone customer base.


The government aim to drive broadband seems to come at any cost at the moment

David Melville, Freeserve
"The advantages being given to BT right now could cost consumers up to 100 million over the next five years, economists estimate," said Freeserve's chief lawyer David Melville.

"BT was gifted these advantages as a former state monopolist.

"The fact that it is now exploiting these advantages to enter the emerging DSL market with the so-called no frills product should be of utmost concern to the telecoms regulator, competition authorities and public policy makers," he said.

Freeserve believes that the telecoms watchdog is turning a blind eye to BT's new service to help push the UK up the broadband league table and meet the government's ambitious targets for making Britain a leading broadband nation by 2005.

No bite?

"Oftel seems to be responding to a political imperative," said Mr Melville.


As long as BT offers a wholesale product of its direct access product it is not breaking regulations

Oftel spokeswoman
"The government aim to drive broadband seems to come at any cost at the moment."

BT has pledged to connect one million more British surfers to broadband by the summer of next year.

This may be good news for consumers in the short term but will do nothing for a competitive industry and will signal that Oftel is no longer a watchdog with any bite, said Mr Melville.

"Frankly Oftel is looking little more than an extension of BT's regulatory arm," he said.

In the past BT's internet operations have been closely regulated and it has not been allowed to use its huge telephone customer base as a marketing tool for other services.

Wholesale version

Oftel however denies that it has done a U-turn on regulating BT.

"As long as BT offers a wholesale product of its direct access product, it is not breaking regulations," said a spokeswoman for Oftel.

Network operators such as Energis and Colt could in theory offer a direct access product, although BT admits that none have so far taken up the offer.

"BT's position in the market makes the direct access product particularly attractive to BT," said a spokesman for the telco.


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