BT outlines new wholesale broadband pricing

November 14, 2006

2 Min Read

LONDON -- BT today revealed how it plans to reduce its wholesale broadband pricing once 1.5m lines have been unbundled. The indicative prices are aimed at offering service providers a cost effective alternative to Local Loop Unbundling (LLU).

The new pricing structure is intended to come into effect from May 2007 - at which point BT believes the UK will have achieved 1.5 million LLU lines – and will be implemented in two stages. The unveiling of the proposals will enable service providers to plan ahead.

From May 2007, service providers will see the rental charge for the most highly used wholesale broadband product – BT IPstream – reduced by 9 per cent, with the price coming down from £8.40 per line per month to £7.63. This price is expected to be reduced further in the second round of changes planned for January 2008.

There will also be further savings for service providers at high density exchanges. The current rebate scheme that applies at 561 of these exchanges is set to be revised to cover 1,016 exchanges. The level of this rebate is also set to increase from £1.10 to £1.24 from May 2007. The rebate reflects the lower cost of providing broadband in these areas.

The increase in the rebate – combined with the lower rental price - will reduce the net monthly rental price (i.e. rental less rebate) in these exchanges from £7.30 to £6.39. This is a reduction of 12.5 per cent. Further increases to the rebate are also planned from January 2008.

Cameron Rejali, BT Wholesale managing director for products and strategy, said: “These pricing proposals will help our ISP customers develop their business plans and compete effectively in the broadband market. The proposed prices better reflect the economies of scale and input costs we face, meaning we can deliver lower average costs to ISPs. The industry has been waiting to hear how we will enable them to compete with the local loop unbundlers and so these proposals should allow them to plan ahead.”

BT Group plc (NYSE: BT; London: BTA)

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