Oftel director general David Edmonds has said he is "encouraged" that cable modems have emerged as a strong, cheaper alternative broadband technology to BT's ADSL service.
The watchdog's latest review of international prices puts the average cost for DSL broadband in the UK at £49 per month compared with £35 in France, £30 in Germany, £28 in the US and just £23 in Sweden.
Analysts have consistently said that the vast majority of internet users are only prepared to pay a maximum of £25 per month for DSL.
In comparison, cable modem prices average out at £26 per month, Oftel said. "The results of the new survey show that, while the UK is doing well in some areas, there is still progress to be made in other areas, notably DSL," said Edmonds.
"However, I am encouraged by recent trends. Over the past few months we have seen price reductions for cable modems and strong growth in the number of both cable modem and DSL users. We are now seeing active competition between cable modems and DSL, which should help drive down DSL prices," he explained.
But cable is available to only 38 per cent of UK homes, compared to 60 per cent for ADSL, a figure itself regarded as far too low by think tank the Broadband Stakeholders Group (BSG).
In its recent report, the BSG said that broadband must be universally available to prevent the UK falling behind as ecommerce develops.
Edmonds also came under fire from former gas regulator Clare Spottiswoode over BT's laggardly approach to delivering broadband services.
Spottiswoode, who split up British Gas and has been asked for her views on broadband by the Treasury, has rejected Oftel's approach. "[Edmonds] is much more reactive, not proactive," she reportedly told The Observer.
Spottiswoode also reportedly said in the newspaper that BT has loaded its costs into DSL technology to force firms looking to offer services such as video on demand through broadband to charge high prices, and that Oftel has failed properly to examine this.
She called for Oftel to investigate BT over the price and quality of its broadband services.
Spottiswoode reportedly dismissed government views that other broadband technologies, such as cable, should be developed to compete with DSL, insisting that it would be simpler to reduce ADSL prices by forcing BT to open up the market, splitting its retail and network operations if necessary.
But a BT spokeswoman has dismissed her remarks. "[Her comments as reported by The Observer] show a lack of in-depth knowledge of the market, our business operations, and our relations with Oftel," she said.
"BT would welcome the chance to enhance Ms Spottiswoode's knowledge about the telecoms industry's operations, and those of BT in particular," the spokeswoman added. "Any possible splitting of BT would be up to our shareholders and nobody else."
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