Why BT won't cut broadband prices in half

There are few better ways to win friends among your customers than cut prices in half on your first day in office - but BT's new boss Ben Verwaayen won't be doing it.

Sunday Telegraph readers were amazed to read that "Vervaayen [sic] is expected to cut BT's wholesale broadband charges by up to half from the current monthly level of around £30 per line."

A 50 per cent cut on Thursday is guaranteed not to happen. Oftel would have to have been informed 28 days before any price cut was made, and a spokeswoman insisted that no such approach had been made.

Cutting wholesale prices below £30 would also be unlikely, as BT will very soon find that it is selling it below cost price - which is not only a complete volte-face, but could actually be against the law.

Oftel could rule that it was a violation of BT's licence conditions. It could also be referred to the competition commission as an abuse of a dominant market position.

Patrick Clark, senior associate at legal firm Taylor, Joynson, Garrett said: "Bar a major change of heart from the Government and Oftel, I would find it very unlikely that BT would be in a position to make such an announcement."

More credibly, BT may announce a smaller cut in its prices on Thursday, when the company announces its results. For example, it may cut the price of its wholesale DSL offering by £5, to £25, making it the same price as its wires-only product.

If this price cut were passed on by BT's resellers, it could see consumer prices of £35 per month and up - still well above the £20 to £30 range widely seen as essential to make DSL a consumer proposition.

A BT spokeswoman said: "Obviously we cannot comment on what Ben may or may not say in a results presentation later this week."