Oftel dismisses broadband pricing row

Telecoms regulator Oftel has dismissed claims by a UK internet service provider that it is failing to push for lower broadband prices for consumers.

PlusNet, which offers a full consumer ADSL package for £21.99 including VAT per month, has written to Oftel to complain more ISPs aren't offering broadband at similar prices but are instead sticking to prices of around £28 a month and above.

Marco Potesta, commercial director of PlusNet, said in a letter sent to Oftel last week: "Household-brand ISPs in this country are selling ADSL at £28 per month and above, when it is more than possible to deliver high quality, lower cost ADSL solutions. Oftel must intervene and ensure that prices are not maintained artificially high as a result of consumer ignorance and large brand price apathy towards their customers." But the regulator says it has not received a formal complaint from PlusNet and is not planning to investigate broadband pricing in the UK.

An Oftel spokeswoman told ZDNet UK: "According to our compliance department, no formal complaint has been received."

There is a considerable gap between the cost of broadband from a major ISP, and from one of Britain's smaller operators - although comparisons can be difficult, with some ISPs also subsidising the cost of an ADSL modem.

BT Openworld charges £29.99 per month for its consumer broadband package, with the first month's rental free. AOL Broadband costs £27.99 per month, with both the modem and the line activation charge thrown in for free.

In comparison, PlusNet has just launched a new product that - like AOL's - includes free modem and line activation, for £24.99 per month. As well as its standard ADSL Home product at £21.99 per month, PlusNet also offers a more restrictive ADSL Home Surf package which does not support peer-to-peer file-sharing or binary newsgroup access, for £18.99 per month.

According to a PlusNet spokesman, these broadband products are profitable despite being cheaper than rival offerings.

As price is a key differentiator between broadband ISPs - who are generally all reselling the same BT Wholesale product - it appears to be in PlusNet's interest for as many of its rivals as possible to charge more for their ADSL. It's certainly a situation that Oftel seems to be happy about.

The Oftel spokeswoman said: "If a customer isn't happy with paying £28 per month for broadband they can go elsewhere. The UK has a competitive broadband market, and it's a good sign that PlusNet are offering these lower prices."

Graeme Wearden writes for ZDNet UK