BT rings in changes by slashing wholesale broadband prices

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BT says it will slash wholesale broadband prices by as much as 12.5 per cent from next year, which is good news for internet service providers (ISPs) and could potentially signal better deals for end users.

The telecommunications giant today announced that prices will come down once 1.5 million lines have been unbundled, a milestone it believes will be reached by May 2007.

Once local loop unbundling (LLU) has reached the required threshold, the wholesale cost of BT IPstream will drop from £8.40 per line per month to £7.63, a nine per cent reduction in price.

ISPs making use of high density exchanges will also benefit from the telco's reductions.

At present, 561 of these exchanges are eligible for BT's rebate scheme. The company plans to increase the level of this rebate from £1.10 to £1.24 and extend coverage to 1,016 exchanges from May next year.

Combined with the reduced rental price, this rebate will mean ISPs pay £6.39 rather than £7.30 each month, a drop of 12.5 per cent.

ISPs opting to use BT's Datastream offering will also be pleased by the changes.

The current rebate of £1.15 will also be extended to more than 1,000 exchanges, reducing the rental charge per end user to £5.90 in those areas.

BT Wholesale has also started to buy LLU connections from BT Openreach, which will slash connection charges for IPstream and Datastream from £40 to £34.86 excluding VAT.

"These pricing proposals will help our ISP customers develop their business plans and compete effectively in the broadband market," said Cameron Rejali, managing director of products and strategy at BT Wholesale.

"The proposed prices better reflect the economies of scale and input costs we face, meaning we can deliver lower average costs to ISPs. The industry has been waiting to hear how we will enable them to compete with the local loop unbundlers, and so these proposals should allow them to plan ahead."

BT plans to execute a second phase in its cost cutting regime, effective from January 2008, which will see the cost of this IPstream fall further, in addition to more rebate increases.

The telco also used its price cutting announcement as an opportunity mention that it plans to trial Wholesale Broadband Connect, a service that uses ADSL and ADSL2+, in a number of UK exchanges from next summer.

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