Pipex cracks £30 DSL price barrier

Pipex has launched the UK's first DSL service for less than £30 but admits that it will make a loss on each customer.

The service is selling for £24.95 before VAT, or £29.31 including VAT per month, with free installation - the first offer below £30, a price widely seen as the minimum for broadband to become a mass-market proposition.

Pipex freely admits that it's making a loss. It has to pay BT Wholesale £25 per line, so the costs of all the additional services such as email servers, support, marketing and provisioning will effectively be paid for by Pipex.

Managing director David Rickards said: "We are selling it as a loss. As one of the pioneers of dial-up internet we have a number of other revenue streams. So this is a commercial decision to build our subscriber base. We are expecting a price drop from BT Wholesale in the next 12 months."

Over the weekend press reports said that BT would cut its wholesale prices by up to a half, but Rickards says the timing of Pipex's announcement is purely co-incidental.

The company has allocated a £2m fund for building its customer base, and plans to use it to pay the £50 installation fee for its first 40,000 subscribers.

This is the latest in a series of offers of "wires-only" DSL, a service which as enabled ISPs to cut installation costs and monthly charges by eliminating the need for an engineer to visit the customers premises.

Customers have to supply their own modems, but these are available for as little as £50.