DSL price reduction warning

Whilst Claranet, the UK's largest independent ISP, is encouraged by BT's decision to cut the cost of wholesale DSL, it still believes that what the broadband market really needs is proper competition.

We welcome the news that we are now able to provide our customers with a DSL service at a lower price, and we do envisage an increase in the total number of orders across the UK, but we are in danger of forgetting the real issue - the need for competition. Steve Rawlinson, Claranet's managing director

BT commented:

We do not want this price reduction to stop Oftel from sorting out the LLU process, which has so far been an unmitigated disaster. Unless Oftel continues to come under pressure, to get the local loop unbundling (LLU) process back on track, or to put some other mechanism for true competition in place, they will have essentially handed the UK broadband market to one company

To date all that has happened is that the price has come down to a level that the industry has been saying is reasonable for two years, and BT has managed to maintain its stranglehold on the DSL market. We need some of the bigger hitters within the telecommunications market to get back in the LLU process, so that they can provide a reach comparative to that offered by BT.

We should also remember that price is not the only concern with DSL. If service levels are poor, ISPs need to be able to buy the service from other wholesale providers.

The price reductions will obviously please consumers in the short term, but the real danger is that in the long term, with less incentive to get the LLU in place, Oftel will have allowed BT to maintain its monopolistic position in the broadband market, which will be a disaster for the UK.