BT told to reduce wholesale charges for internet access

Oftel yesterday moved to cut the price of unmetered internet access for consumers by proposing BT should slash its wholesale charges.

The telecoms regulator said it thought BT should cut its wholesale charges by 17 per cent because it was charging operators "for certain call routing and call management measures" that were "no longer technically necessary".

"Oftel's action will ensure that operators and consumers pay a fair price for unmetered internet access from BT, and reflects the relevant costs that BT incurs to provide this service," said David Edmonds, director general of telecommunications.

But the move, which followed an investigation prompted by a complaint from Cable & Wireless, will only see the price of unmetered dial-up internet access fall if internet service providers pass on the saving to consumers. BT said yesterday it was still considering the regulator's proposals and had until 7 May to respond. The planned cut is expected to knock some £10m to £15m off the company's annual revenues.

"When Oftel required BT to introduce a wholesale unmetered internet access product, BT introduced a number of additional measures to support the new service which were included in the charge to other operators," Mr Edmonds said.

He said BT had since made several improvements to its network which meant those extra measures were now unnecessary.

If the planned cut is implemented it will also be backdated to December 2001 – the time that BT made the improvements to its network.

The planned measures were outlined just a day after BT announced it was cutting the wholesale price of its broadband packages from the beginning of next month.

But the price of broadband for consumers looks unlikely to fall since BT's internet service provider customers, who buy the product wholesale from BT and sell it on to consumers, claimed they were not necessarily any better off after the move.

BT, which has some 800,000 broadband customers, cut the wholesale price of its broadband product aimed at consumers to £13 a month from £14.75 and cut the wholesale prices of packages for small businesses as well.

But AOL, which buys BT's wholesale service, thought it would actually be "marginally worse off" since the telecoms group had last week doubled its broadband activation fee.