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Last Updated: Thursday, 30 September, 2004, 08:58 GMT 09:58 UK
BT mulls u-turn on broadband cost
By Jane Wakefield
BBC News Online technology staff

Network wires
Ofcom wants alternative operators to use BT's network
BT has hinted that it could make a u-turn over broadband price hikes that some small internet providers in the UK say could drive them out of business.

The price change was made in order to prevent the telco falling foul of regulator Ofcom, BT said.

But it admits that it could have got its sums wrong, with industry and MPs lobbying against the price rises.

It plans to talk to affected providers and could potentially drop the price, said a BT spokesman.


"The price increases are having an impact on smaller ISPs but it wasn't something that we did lightly," he told BBC News Online.

It is widening the gap between the small and large players and driving the smaller ones into bankruptcy
Ben Butler, C2 Internet
"If we got our sums wrong and the price changes are too big we might bring them down," he added.

Small internet service providers have united in anger over the changes, which do not affect the larger players such as AOL and Wanadoo because they buy broadband capacity from BT in bulk.

For smaller ISPs, both in the residential and business market, the price hike could potentially be devastating.

"The price change favours large ISPs that have many connections and it looks as if BT and Ofcom are only considering the needs of the residential market," commented Ben Butler, a director of C2 Internet, a business ISP based in Manchester.

"It is widening the gap between the small and large players and driving the smaller ones into bankruptcy," he added.

For Garry MacDonald, of Northern Ireland-based ISP Tartan IS, the price rise is just another example of BT's domination of the UK broadband market.

"I have no choice about jumping off the BT bandwagon and there is no other carrier I can use," he said.

"BT has forced this on to ISPs, created a dogfight and then stepped back and hidden behind Ofcom's decision," he added.

Open competition

Ofcom's aim in reviewing BT's wholesale price structure was to make the market more attractive to alternative operators keen to compete with the telco.

Man sat at computer terminal
Small businesses could be hard hit by price rise
"Our aim is to create sustainable competition and inevitably this involves a trade-off," said an Ofcom spokesperson.

"In the medium to long term it is about providing ISPs with alternatives to BT," he added.

But the long-term goal has created more immediate problems, said Mr Butler.

"It depends how long it takes for that diversity to come and if in the meantime the number of ISPs in the UK has fallen from 200 to 10 then that hasn't achieved the goal of the end user having more choice," he said.

Trade organisation UK Internet Federation has been lobbying on the issue, describing the price rise and other planned changes to the way BT charges as a step back for broadband in the UK.

"It is another barrier to the rollout of broadband, particularly to rural or suburban areas," said communications manager Steve Harris.

For Mr MacDonald, if the price BT charges remains the same there will be some stark choices.

"I don't think my customers would take kindly to having the price they pay increased. It is not something I want to do but it might get to the point that I have to," he said.

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