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Some providers react negatively to the price cuts
Thursday 03 April 2003 17:03:00 by Andrew Ferguson

To prove that BT Wholesale cannot grab all the headlines, a number of providers have voiced discontent at this range of BT price cuts, and in particular the price rises which are generally hidden away and invisible to the end-user.

THUS plc is asking OFTEL to commence an investigation into the 'margin squeeze' that has been created by BT Wholesale price announcements today. Phil Male, the THUS COO raises the issue that the price cuts only apply to the IPstream ranges, there has been no reductions in the costs of the Datastream connection and its various backhaul options. The essence of the complaint seems to be that if BT are allowed to keep reducing pricing like this, it will squeeze LLU operators out of the market place, and eventually BT will be able to set artifically high prices.

The Register also has a range of comments from other providers namely, Tiscali and Freeserve. The issue of whether BT Wholesale is squeezing competitors out of the market place is important, but if BT can show the price cuts are due to genuine reductions in cost, then in theory similar cost reductions should be possible for LLU operators. Otherwise if the price changes are blocked then BT Wholesale may be in the position of its costs reducing and its profit margins increasing without being able to stimulate the market further.

The question is, will LLU and competition in the Broadband market place, be sacrificed so that the political target of Broadband Britain can be met on time.


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