BT presses on with broadband price cuts

BT is adamant that it will cuts the cost of its wholesale broadband products this week, despite an Oftel investigation into the legality of the move.

The telco announced earlier this month that the prices of its wholesale business ADSL packages will fall by over 50 per cent, in addition to a smaller reduction in the cost of its consumer ADSL product.

These cuts are scheduled to come into place on 1 May. They have been thrown into some confusion, though, by Oftel's investigation. Several of BT's rivals have complained that they are anticompetitive because they are not being applied to certain network products used by other operators.

It is understood that this investigation could reach a conclusion within days, but BT is pressing on with the cuts regardless.

"We've announced the cuts, we told Oftel about them beforehand, and we're definitely going ahead with them," a BT spokesman said on Monday. He added that BT had supplied Oftel with significant amounts of information about the cuts, but had not yet received any official word about the investigation.

Oftel can take up to three months to conduct an investigation, but it is rumoured that a decision might be taken before the end of this week.

An Oftel spokeswoman confirmed that an investigation into the price cuts was underway, following complaints from Thus, Energis, and Tiscali.

"Really, it is for BT to ensure that any price cuts or new products are compliant with its licence," explained the Oftel spokeswoman.

The complaint is based on the fact that BT has only cut the price of its IPStream range of products - which BT Wholesale sells to ISPs - and not its Datastream service, which other operators use to connect their network with BT's.

Thus, Energis, and Tiscali claimed that this move breaks the terms of BT's licence by creating a margin squeeze, under which it could sell wholesale broadband at unfairly better terms than its rivals.

Graeme Wearden writes for ZDNet UK