BT forced to slash broadband prices

The telecoms watchdog Oftel yesterday moved to cut the price of high-speed internet access for business customers, by going through with previously proposed price cuts for BT.

The regulator ordered BT to cut the connection charges for so-called partial private circuits, which enable rival telecoms operators to offer services to their customers over the BT network, by 50 per cent. Rental charges, it said, should be cut by about 20 per cent.

David Edmonds, Oftel's director-general of telecommunications, said the move would "act as a springboard to boost competition in the business broadband market".

The new fees, which Oftel had proposed in September, will be backdated to 1 August 2001 when the products were first introduced by BT. In September, the regulator had proposed BT cut the connection charges for partial private circuits by 50 per cent and rental charges by 30 per cent and urged other telecoms operators to pass on those cuts to their business customers.

Oftel said yesterday it believed the new charges better reflected "the costs BT incur in providing the services" and would allow other operators "to compete fairly with BT in the retail market for leased lines".

The product currently generates about £100m of sales a year for BT and analysts had previously estimated such a price cut could knock about £20m to £30m off that figure a year.

Jane Hannah, the managing director of Kingston Communications' inbusiness division, welcomed the decision: "It levels the playing field for telecoms operators and at last, businesses will have a true choice of telecoms suppliers based on quality of service and value, not just cost."

As previously flagged, Oftel also ordered a number of improvements to BT's service level agreements which, it said, would act "as an incentive to BT to provide a high quality level of service to other operators". The improvements include BT paying compensation to other operators in the event of late delivery.

"Small rural businesses to big global firms should benefit considerably as operators will be able to offer more competitive prices and guarantee high levels of service," Mr Edmonds said yesterday.