Freeserve anger over BT's broadband plans
Published: 20 Sep 2002 12:46 BST
Freeserve has again accused BT of acting in an unfair manner over broadband, and called on Oftel, the government and the Office of Fair Trading to consider taking action over BT Retail's new "no-frills" broadband product.
Freeserve believes that BT is taking unfair advantage of its dominant position in the UK telecoms market in the way it is launching BT Broadband, the "no-frills" high-speed Internet product -- repeating earlier comments made by the ISP back in May.
Freeserve is also unhappy that BT's £10m broadband awareness campaign, which began on 22 September, will be closely followed by another large advertising campaign for BT Broadband.
BT Retail began offering BT Broadband earlier this year, and a massive £23m campaign advertising the product is due to begin in October. This, BT hopes, will help BT Retail to reach its target of 500,000 customers by next summer.
Freeserve claims that BT Retail will unfairly benefit from BT's strong position in the UK marketplace -- in particular, the fact that Retail will be able use BT's telephone bill to both advertise BT Broadband and to charge for it.
"BT enjoys certain unmatchable advantages because of its near-monopoly in residential telephony. BT was gifted these advantages as a former state monopolist. The fact that it is now exploiting these advantages to enter the emerging DSL market with the so-called 'No Frills' product should be of utmost concern to the telecoms regulator, competition authorities and public policy makers," said Freeserve.
BT is not allowed to use BT Group money to cross-subsidise business units such as BTopenworld, its Internet arm. According to Freeserve, this is why BT Retail, rather than BTopenworld, is launching the "no frills" product" -- as BT Retail will get access to the BT bill, something that BTopenworld is not permitted.
"BT Openworld, which was BT's consumer Internet division, has been bypassed as the provider of 'No Frills' only because it does not enjoy the same unmatchable access to some 20 million phone customers," claimed Freeserve.
According to reports, Freeserve is considering trying to get the Competition Commission to investigate BT, but the ISP refused to comment on this.
BT responded saying that Freeserve's comments seemed "strange". "The UK is probably the most competitive broadband market around, and BT has around 25 percent of all broadband end-users," a BT spokesman said.
"The £10m awareness campaign should help everyone in the industry, including Freeserve, which is why most people have welcomed it," he added.
Ad pause
BT has decided to stop advertising any of its broadband products for the duration of its £10m broadband awareness campaign, which will runs until 1 October, in an attempt to avoid claims that some of the telco's own business units -- such as BT Retail and BTopenworld -- might unfairly benefit from the ad blitz.
"BT will not be advertising any of its broadband products during the period of the £10m advertising campaign," a BT spokesman told ZDNet UK News. "We agreed this with Oftel, but I don't know whether this is a formal arrangement or just an informal understanding," he added.
According to Oftel, though, no deal exists at all, and there is no limit on how much advertising BT can do.
"There is no agreement between Oftel and BT about this. BT's advertising strategy is its decision, and it's up to BT how they run this broadband advertising campaign," an Oftel spokeswoman insisted.
Sources indicate, though, that regulatory issues are at the heart of BT's decision. "I would be very surprised if this didn't involve a deal between BT and Oftel, with the direction coming from Oftel," an informed source told ZDNet UK News.
The £10m campaign, called Possibilities, promises to be one of the most intensive marketing drives ever launched in Britain. It features Pulp's lead singer Jarvis Cocker, fantasy characters fighting at Victoria Station, and two claymation pigs from Aardman Animations.
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