BT to slash high-speed access prices

The cost of high-speed internet access is poised to tumble after BT today announced a cut in charges to internet service providers.

Millions of internet users will benefit from the 40 per cent drop in BT charges for its broadband network, which is 10 times faster than standard dial-up services.

Monthly rates charged by providers such as Freeserve, AOL and Tiscali should come down as a result, from about £40 a month to between £25 and £30 a month, says BT. The number of people using broadband services is expected to rise from the current 145,000 to one million by next summer.

Britain has the lowest broadband usage of the world's leading seven economies - Germany has 2.1 million users. The drop in charges should encourage far greater use.

Broadband represents the next stage of the internet revolution by allowing a range of improvements such as always-on internet access and high-quality video images on demand down telephone lines. It provides far more effective teleconferencing and mobile office technology in general.

BT's new Asymmetric Digital Subscriber Line technology (ADSL) allows high-speed data to be carried on existing copper telephone lines at the same time as normal voice calls, so that broadband internet users will no longer need to have fibre-optic cable fitted. Standard modems carry 56 kilobytes of data per second but ADSL carries 500. So far, up to 1,000 of BT's 6,500 local exchanges have been fitted with the fibre-optic connections which deliver the data to the copper-wire business or household networks.

BT's announcement today will see it cut its wholesale line rental for consumer connections from 1 April from £25 a month to £14.75 a month. It says the country's 200 service providers should pass "almost all" of the reductions on to customers.

BT chief Ben Verwaayen said the move will make broadband "affordable, attractive and accessible". The company predicts there will be two million broadband users within two years.

AOL welcomed the move, with UK chief executive Karen Thomson saying it "takes us much closer to the dawn of broadband Britain". AOL is examining its monthly charges in light of today's announcement.