BT to reduce wholesale Internet prices
In an action that sees BT trying to keep some control of the UK Internet, it announced the reduction of wholesale access prices for broadband yesterday.
As the competition in the UK heats up it is BT, as well as more colourful companies like Bulldog that have suffered over the past few years. BT has been constrained by regulatory forces from dropping prices below competitors in order to allow for competition. The final ignonimity for BT was that it was forced to provide access for those companies to its switches (exchanges) so that they could connect directly to customers and effectively by-pass BT altogether – called local-loop-unbundling LLU.
Under the Telecommunications Strategic Review, BT made a commitment that it would not lower the prices of its wholesale broadband offerings until the UK achieved 1.5 million LLU lines. The pricing proposals are in line with additional commitments made to Ofcom to ensure pricing stability in the broadband marketplace.
From May 2007, service providers will see the rental charge for the most highly used wholesale broadband product – BT IPstream – reduced by 9 per cent, with the price coming down from £8.40 per line per month to £7.63. This price is expected to be reduced further in the second round of changes planned for January 2008.
There will also be further savings for service providers at high density exchanges. The current rebate scheme that applies at 561 of these exchanges is set to be revised to cover 1,016 exchanges. The level of this rebate is also set to increase from £1.10 to £1.24 from May 2007. The rebate reflects the lower cost of providing broadband in these areas.
The increase in the rebate – combined with the lower rental price – will reduce the net monthly rental price (i.e. rental less rebate) in these exchanges from £7.30 to £6.39. This is a reduction of 12.5 per cent. Further increases to the rebate are also planned from January 2008.
At the same time BT will begin trials of 24Mb/sec ADSL which should roll out across the beginning of 2008.