[UK News] BT's ADSL price cuts mean nothing to consumers

Lemming

From this months issue of PC Pro

Article found here (registration required)

Thursday 3rd April 2003


BT's ADSL price cuts mean nothing to consumers
[Computer Shopper]16:52

Consumers won't benefit from BT broadband cuts.

BT's broadband price cuts that were announced today shaved more than 50 per cent of the wholesale prices for business products, but left consumer ISPs with their hands tied as other price changes make BT's fanfare figures meaningless.

'It's nothing but a PR stunt,' we were told by a spokesperson for fairADSL, a small, bare-bones ISP that offers ADSL at £18.99 a month and which is worried small ISPs are being squeezed out.

What BT's CEO Ben Verwaayen describes as a 'major price cut in wholesale DSL,' translates to a cut of £1.75 that can rise to as much as £2 with volume discounts for ISPs with lots of customers. What's more, BT has increased the price of its central pipe, by merely pence per customer, and leaving many ISPs no option to cut prices and with the onorous PR job of deflating consumers buoyed up with BT's announcements.

Asked whether the ISP would be able to pass on any discount to its customers, we were told by fairADSL: 'If we can, we will. But it seems unlikely we will be able to do so.'

Freeserve too, told us: 'We don't plan to reduce our prices and we will keep this under review.'

AOL's Head of Corporate Media Relations Jonathan Lambeth said that BT's announcements leave ISPs 'nothing to pass on to the subscribers.

He said that the figures don't add up to a price cut. £1.75 works out at about £21 over a year. But with BT reinstating its activation fee at full price, new subscribers incur more cost, not less.

A spokesperson for BT Wholesale told us: 'We're disappointed if ISPs don't feel able to pass on these price cuts.'

'We're glad that BT has cut the monthly charges,' said Lambeth, 'But our costs have not changed... It hasn't really helped anyone, and the implication that costs have gone down is incorrect.'

He also shares fairADSL's concern for the smaller providers: with BT chopping and changing its prices, ISPs have no certainty that the price they can offer today will still make financial sense tomorrow. With BT halving the activation fee, many ISPs swallowed much of the set-up costs altogether, which proved a great drive to broadband take-up.

Now with the full activation fee back in place, ISPs are having to either follow suit or come up with more creative ways of scraping back the extra £25 they have to pay.


Matt Whipp

Looks like BT are playing sneaky PR stunts in the UK. Give with one hand, take more back with the other. Whilst the ISP is the one having to pay full conection charges, it'll end up being the consumer who gets it in the neck more than likely.