Broadband changes welcomed by Energis and Thus

Thus and Energis have welcomed moves by Oftel to force BT to provide a new option for broadband service providers, even though they still have concerns over pricing.

Under current regulations, companies wanting to offer broadband internet access using DSL have three main options - they can either buy a wholesale service from BT and sell it under their own label, or they can install their own broadband equipment in BT's local exchanges.

A third option, which companies such as Energis and Thus - owner of Demon Internet - use, is to connect their network to BT's own broadband equipment within the exchange. They then have to connect it to the nearest node in their own network, which they often have to do with a circuit hired off BT.

The new regulation allows those companies to take broadband traffic from any part of BT's network - effectively increasing their range of options and cutting the costs of connecting a broadband customer in this way.

A spokesman from Thus welcomed the decision, and particularly the decision to impose service levels and to penalise BT for failing to reach them. However, he said that the pricing model Oftel has chosen still leaves BT too much freedom to determine prices.

He said: "The pricing model they have chosen is not cost oriented, it's based on the retail price, minus [the cost of sales]. And BT still has a lot of room to manoeuvre in determining what is minus."

A statement from Energis chief executive David Wickham also welcomed the decision, and echoed Thus's disappointment at the adoption of the retail-minus pricing model.

"Our key focus now is on determining just what price we are going to have to pay BT for these products," he said. "A retail price minus the cost of sales is not our ideal and does not guarantee true competition. However, BT has always rated the cost of sales and marketing for their products as a significant chunk of the overall retail price.

"Assuming this principle is applied here I am cautiously optimistic that we will be in a position to provide affordable broadband products to our customers in the new year."