BT Wholesale price cuts on the way?
Perhaps not the most obvious place to read about price cuts at the BT Wholesale level for ADSL services, but the Belfast Telegraph has BT saying that wholesale price cuts will be announced next week with the savings feeding through in the next year.
News of price cuts is welcome, but the cuts may not be large reductions in the price of IPStream and Datastream products but rather the announcement of the new Wholesale Broadband Connect (wBBC) products. BT reached an agreement with Ofcom to not reduce heavily the cost of IPStream rental and BT Central prices until 1.5 million LLU lines was reached. As we have just passed the one million LLU line mark, and lines are being activated at 30,000 per week the time is coming for BT to be able to make price changes, after prices at the wholesale level have been relatively fixed since April 2004. For the consumer it is hard to realise that the Wholesale prices most providers pay have not altered for 30 months, most of the price drops for non LLU providers has been through careful (some would say restrictive) management of the resources they have in the form of fair use policies and usage allowances.
Wholesale Broadband Connect (wBBC) is the 21CN equivalent of a BT Central, with a new IP based network a new interconnect product for the providers was needed, and as 21CN should be cheaper to run for the same size product we are expecting the wBBC product to be cheaper. While Wholesale price cuts almost always produce price cuts for the retail part of the market, service providers need to plan carefully and avoid making price cuts that are unsustainable. The broadband market is changing and usage patterns are changing, and with the expected full launch of ADSL2+ by BT Wholesale in 2008 usage patterns at peak times could be very different. The ideal would be for those providers already using traffic shaping to relax the hold it has on traffic a bit more, and for usage allowances to increase, giving something back to existing customers.
So what are the time scales for ADSL2+ and wBBC products? Well we have been expecting pricing to be announced for the last few weeks. Other dates in the roll-out of wBBC and ADSL2+ are an alpha trial around April 2007, followed by a Beta trial in July 2007 and a full launch in January 2008.