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The Hidden Agenda - BT's xDSL £Cuts

Posted: 04th Feb, 2005 By: MarkJ
One report claims that "industry insiders" have pointed towards a more sinister use of BT's new ADSL 'reward' price cuts. The reductions have been targeted towards busy exchanges, which are also used by LLU competition:

On the face of it, increasing speeds and cutting prices appears to be great news for consumers. However, there is a catch. The price cuts of around eight per cent will only be applied in areas where there is "a combination of high customer demand, high take up and lower costs". In effect, BT Wholesale will be passing on volume savings delivered by high demand. So far, 561 local BT exchanges have been earmarked for the rebates of between £1.10 and £1.40 per line.

However, industry insiders claim these exchanges are the same ones that rival operators are currently investing, in a process know as local loop unbundling (LLU). In effect, BT is lowering the cost of its own broadband service in areas where it will be competing head-on with LLU operators.

And industry insiders claim BT is already up to its old tricks. One senior industry insider, who asked not to be named, told The Register that far from being, as BT Wholesale chief executive Paul Reynolds put it, "fully committed to seeing LLU a success", BT is "demonstrating its ability to undermine wholesale competition and LLU".


Typically the price cut itself is miniscule and variable, thus consumers are unlikely to see any benefit. However, a provider with thousands of customers on a busy exchange could certainly see the advantage in choosing BT. More @ The Register.
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