Broadband News

BT Wholesale Price Changes

BT Wholesale has this morning announced its intentions to lower its wholesale service pricing to ISPs once there are 1.5 million Local Loop Unbundled (LLU) lines, following its previous agreement with Ofcom not to do so until this had been reached as there were concerns over BT Wholesale's dominant position in the market. BT has now indicated a new pricing structure which it expects to come into force in the middle of next year.

From May 2007, the wholesale cost of the popular BT IPStream broadband service (which connects the end-user to the ISP) decreases by 9% from £8.40 to £7.63. BT currently runs a rebate scheme for providers on 561 exchanges in highly populated areas where broadband demand is strong and the cost of activating lines is lower. The number of exchanges on the scheme will increase to 1,016 and the rebate is expected to increase from £1.10 to £1.24 which in turn reduces the costs of providing broadband to a very significant number of users on BT IPStream services. The total effect of these means the cost of an end user connection on over 1,000 exchanges (covering around 65% of the UK population), is set to drop by about 12.5%. It is also indicated that prices are likely to fall again in January 2008.

“These pricing proposals will help our ISP customers develop their business plans and compete effectively in the broadband market. 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.”

Cameron Rejali (Managing Director for Products and Strategy), BT Wholesale

Service providers using the BT Datastream service will also benefit from the increase in exchanges where the rebate will be paid reducing the effective cost from £7.05 to £5.90 in those particular areas from May 2007.

BT Wholesale has now come into line with other wholesale providers and will be required to pay for the provisioning and ceasing of lines from Openreach and as such from May 2007, it will be passing on these cost changes resulting in a lowering of connection charges from £40 to £34.86 and the introduction of a termination charge which applies to cancelling a broadband service costing £33.75, although it is important to note that this does not apply if you migrate your service to another provider using a MAC code, or for providers engaged in bulk migrations to LLU.

In general these changes are going to reduce the cost of providing broadband to many service providers which will be welcomed by those affected, some of whom have already been arguing that the current restrictions on BT Wholesale pricing is unfair to those not using LLU. It is quite likely that the savings will in some format be passed onto end users, but the cost base for providers is wider than the DSL line rentals and as such consumers should not celebrate yet. It is also worth noting that this has only just been announced and therefore your service providers are unlikely to be in a position to discuss their plans at this time, not least as the pricing changes are conditional on regulatory obligations, so be patient. One notable concern is the introduction of cessation charges (which is not a BT Wholesale invention), which may assist companies currently charging for MAC codes, although hopefully this issue will become insignificant as Ofcom gets tougher on ISP migration policies.

BT Wholesale has also confirmed its intentions to start trialling "Wholesale Broadband Connect" in selected exchanges from mid-2007, a service based on the 21CN network with ADSL and ADSL2+ technologies improving network connectivity and providing speeds up to 24 Mbps with a view to launching the service to over half the UK from early 2008. Nationwide roll out is based on the 21CN network. See the switched-on website for more details of when 21CN will reach you.

The full press release from BT is available here.


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