Internet service providers (ISPs) have welcomed BT's reduction of its DataStream wholesale price today, which will offer greater flexibility in how ISPs provide customers with broadband internet connections.
But the 50p a month reduction will not level the playing field between BT's IPStream wholesale broadband and DataStream services, nor necessarily reduce prices for users in the short term.
DataStream is the delivery method that allows rival wholesalers to offer services to ISPs or direct to customers using their own networks.
It offers more scope for competition and reduced prices, while IPStream requires ISPs to use BT's network.
BT reduced its IPStream prices by up to 40 per cent earlier this year only for Energis, along with Tiscali and Your Communications, to appeal to Oftel that the telco was abusing its dominant position in the market by not reducing DataStream prices in the same proportions.
The ISPs argued that the unequal wholesale prices of DataStream and IPStream harmed the take up of broadband. And they appear to be winning the argument.
BT announced that it was implementing today's cut following discussions with customers and Oftel. "Clearly the arguments made by Tiscali, Energis and Your Communications were a factor in coming to this decision," said a BT spokesman.
The move brings down the cost of the end-user element of the broadband connection by 50p to £8.05 per month.
In addition, BT will be raising the monthly rental of its 2Mbps business product, IPStream Office 2000, from £38 to £43, and IPStream S2000 from £43 to £48.
The telco said that the changes will provide wholesale customers taking DataStream with more flexibility in competing with BT's IPStream products.
But it remains to be seen whether ISPs will alter the prices they charge customers. "It's unlikely," said Tim Johnson, analyst at Ovum.
Clare Waters, corporate office director at Energis, said: "BT's modest price cut today is an encouraging step, although it doesn't go far enough.
"More progress will be required for the UK to achieve widespread roll out of broadband."
Her statement was echoed by Sergio Cellini, chief executive of Tiscali UK, in a statement to vnunet.com.
"We need to look at the overall impact, but there is probably a little more movement needed to establish parity," he said.
The DataStream price cut comes into effect today. The other changes will be effective from 16 October.
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