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Could Oftel block the latest BT ADSL price cuts?
Thursday 24 April 2003 14:29:00 by Andrew Ferguson

Tim Richardson of The Register has run a news item, that raises this as an issue. The potential blocking of the latest price cuts due to come into effect on 1st May, is something that Oftel would normally look at before the new pricing came into effect. In this case it appears that due to complaints, Oftel may consider delaying the price cuts while it carries out an 'anti-competition' investigation.

The main area of concern is that prices for BT IPStream products were dropped, but not for the BT Datastream product range. Datastream is the product range behind the new 40:1 and 50:1 contention 1 & 2Mbps services. Datastreams pricing consists of two parts the DSLAM port rental (currently ~£9/month) and the cost of the virtual path used for the backhaul. One can guess that it is the backhaul costs that are the main concern, since this will be the bulk of the cost for the higher speed services. The new IPStream Office 1000 and Office 2000 pricing makes the 50:1 services less attractive than prior to the price cuts.

Maybe BT is sitting in a win-win position, if the price cuts are allowed they can then corner a larger share of the fast growing greater than 0.5Mbps market place. Conversely if the price cuts are blocked, and BT has really lowered its costs they will be able to make a much higher profit, but this may be from a smaller market share if competitors make good use of the situation.

The position of the consumer, and availability across the whole of the UK is rarely considered in these cases. The desire to ensure BT do not retain a monopoly of Broadband services is the driving factor, rather than ensuring the whole population has a fair chance for access. Perhaps it is time for the regulators in the form of Oftel and Ofcom to consider that the UK is not one generic lump, but may require different regulatory actions for different parts of the country.

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