BT slashes price of high-speed internet

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The cost of fast internet access is set to fall dramatically following a decision yesterday by British Telecom to lower prices. The move will lead to the cost of a broadband internet connection falling from the current £44.99 a month to around £20-£25, a month, and gives fresh impetus to the Government's vision of "Broadband Britain", in which computer users can access a wide range of hi-tech services on-line.

The new era of high-speed on-line connections is being made possible by BT's decision to cut the wholesale price of a broadband line from £25 a month to just £14.75 a month from 1 April. This is the price BT charges internet service providers such as Freeserve and AoL to use its high-speed digital network. This network facilitates internet speeds 10 times as fast as the dial-up services operated on ordinary "narrowband" lines.

Internet service providers have long campaigned for BT to cut its wholesale prices, saying they make it impossible for them to offer a package that is attractive to consumers. The result is that Freeserve and AoL have signed up only a negligible number of customers to their broadband services, leaving Britain way behind nations such as Germany. Most domestic users in Britain are signed up to free services where there is no monthly fee, the only cost being the phone time they use when they are on-line.

BT currently has just 145,000 users signed up to its digital telephone lines, but aims to boost this to a million by next summer by targeting small businesses, people who work from home and families who need fast internet access.

Announcing the price cuts, BT's new chief executive, Ben Verwayeen, said the move would make Broadband Britain a reality. "This will drive the whole market forward by making broadband affordable, attractive and accessible."

The Government and Oftel, the telecoms regulator, welcomed the move, having earlier called on BT to cut its prices. Rivals also praised the decision, though Telewest, which offers fast internet access via its cable network, had a dig at BT. Adam Singer, Telewest's chief executive, said: "It was getting hard building broadband by ourselves, and it's great that BT has finally turned up to lend a hand." He also said BT's service was slow, describing it as "a racing Zimmer frame".