BT is encouraging other service providers to use these savings to set better prices for consumers and businesses. It is also searching for partnerships to extend broadband to less commercially viable areas. The company is aiming for one million ADSL broadband connections by summer 2003. At present, there are only 145,000 users.
The UK has one of the lowest take-up rates of broadband access in Western Europe. BT’s current prices have taken much of the blame for this. Currently, consumers can expect to pay around £40 per month for BT’s broadband products. This compares to charges of around £25 for cable broadband services from NTL and Telewest.
In what is being seen as his first significant strategic move since becoming Chief Executive of BT, Verwaayen said:
"Broadband is the future for Britain and we're putting it at the heart of BT's plans for growth in the UK mass market. This will drive the whole market forward by making broadband affordable, attractive and accessible.
"This is a stretching programme, but achievable. Through substantial reductions in the cost of providing service we can set prices that will stimulate the market strongly, and make money on it. This is a sustainable business model."
Paul Reynolds, CEO of BT Wholesale added:
"We have now achieved the price that service providers told us they needed to get end user prices below £30. We have made sustained improvements in network service levels in recent months and are taking action on automation to help service providers to improve the customer experience even further. We expect these new low prices to drive up demand for broadband. Now the momentum for broadband take-up should build. Today's announcement is a first step, but a significant one."