BT set to slash online costs

TELECOMS giant BT IS set to shake-up the internet and television world, by slashing the costs of high-speed internet access by up to 50%. The cuts will lead to a dramatic increase in demand for the service and pave the way for BT to go head-to-head with the cable television operators NTL and Telewest, and satellite broadcaster British Sky Broadcasting.

Cable operators have an advantage over BT because they can offer telephone, high-speed internet and interactive television services. BT believes its technology, which will eventually allow it to pipe broadcast quality pictures down a conventional telephone line, will redress the imbalance.

The move will be announced on Thursday by newly-appointed chief executive Ben Verwaayen, when he unveils a December quarter pre-tax profit of around £51m, according to forecasts by house broker Merrill Lynch.

This fall on last year's £781m will reflect the losses at its disastrous Concert venture with AT&T, heavy interest charges, and losses at its since-spun-off mobile arm mmO2. Sales will fall to £5.1bn from £5.2bn.

Verwaayen is first expected to cut the cost of the service BT's rivals re-sell to their customers, but price cuts to its own service, which currently retails at about £25 a month, are also expected. He will also acknowledge that BT has been slow to make high-speed internet available.

A recent Organisation for Economic Co-operation and Development survey concluded that the UK, with 150,000 users, was 22nd out of 30 countries. Germany is in the top ten and has around 2m users.

Meanwhile, NTL chief executive Barclay Knapp is stepping back from managing his US telecoms business CoreComm in the wake of criticism from investors in the UK cable group. He will step down as CoreComm's chief executive and become part-time chairman.