BT slashes broadband prices for rivals by up to 70%

BT Group yesterday pre-empted a regulatory crackdown and slashed the prices that it charges rivals for access to its local exchanges ­ a move expected to accelerate the roll-out of high-speed broadband internet services.

BT Group yesterday pre-empted a regulatory crackdown and slashed the prices that it charges rivals for access to its local exchanges ­ a move expected to accelerate the roll-out of high-speed broadband internet services.

Charges faced by rivals for so-called "local loop unbundling" will fall up to 70 per cent. Prices for other wholesale broadband products sold by BT to alternative telecoms operators will fall as well. BT has also agreed improvements in the technical services it provides to rivals in the fixed line, residential phone market to make alternative carriers such as TalkTalk, Tesco, One.Tel and Tele2 more competitive.

However, Ofcom, the telecoms regulator, yesterday stopped short of forcing BT to reverse the recent tariff changes for the residential phone market that saw it abolish standard charges and migrate 9 million customers on to its BT Together discount tariffs.

Ian el-Mokadem, managing director of Centrica Telecom, which owns One.Tel, said: "BT have now been forced to do things that they have been dragging their feet on for years. BT hasn't done this out of the goodness of its heart. It's done it because it was going to be forced into it. We now have a regulator who is prepared to put the squeeze on BT and force them to do some of these things."

Stephen Carter, the chief executive of Ofcom, welcomed BT's price changes for local loop unbundling and said companies and their shareholders should now have the confidence to invest more in broadband services. "The exciting thing is it's happening now, it's happening fast and it's happening while the market is coming out of the technology bubble," he said.

The UK has trailed much of Europe in terms of the price of local loop unbundling and its delivery, according to Ofcom.

In what appeared a carefully choreographed series of announcements that helped calm possible stock market nerves, BT announced its price changes at 7am yesterday, followed by a statement from Ofcom.

The regulator unveiled proposals to increase competition in broadband services. A consultation document on local loop unbundling was published, inviting views on how competition could be encouraged.