Customers in the U.K. can finally look forward to high-speed data and Internet services, now that British Telecommunications PLC (BT) has announced it will offer ADSL (asymmetric digital subscriber line) services starting early next year.
By March, 2000, 400 switching exchanges, covering almost 6 million [M] households and businesses will be upgraded for ADSL, according to a BT press release issued today.
ADSL technology enables existing copper telephone lines to be transformed into high-speed data lines, sending data at speeds 10 to 40 times faster than analog modems.
The first areas to be upgraded to ADSL will be the London metropolitan area, and the cities of Cardiff, Belfast, Coventry, Birmingham, Manchester, Leeds, Newcastle, Edinburgh and Glasgow.
BT will charge service providers, such as ISPs (Internet service providers), wholesale prices of between 40 pounds (US$64) and 150 pounds per month, per user. Retail prices will be decided by the individual service providers.
BT has already begun some necessary work for the service. Earlier this month, BT awarded a multi-million pound order to Fujitsu Ltd. and Alcatel SA to upgrade its network with ADSL equipment. No underground work is necessary to equip a telephone network for ADSL, BT said. A modem is installed in users' homes or businesses, as well as at the local switching exchange.
BT has a monopoly on ADSL service until 2001, because of an agreement between BT and the U.K. telecommunications regulator Oftel (The Office of Telecommunications). In the event that BT isn't offering ADSL service in a region, other carriers may do so, by upgrading BT's local network and paying BT to use the network. The agreement also stipulated that when BT upgrades local lines, it must offer those upgraded lines to other operators at a reasonable price.
"Any interested providers can set up the ADSL boxes at the customer's side and provide service, but they have to purchase the access from BT," said Rita Solanke, an analyst at Yankee Group.
Because of the high cost and lack of competition, Solanke said that prices for the service would remain high, and the ADSL market would be of interest mainly to small- and medium-size companies.
The main competition for ADSL will likely be broadband access via the cable TV network. Although cable access is typically cheaper than BT is proposing to charge for ADSL, right now, cable Internet access is not available on any significant scale in the U.K. That could change however, if NTL Corp., which just last week purchased the cable assets of Cable & Wireless Communications PLC. goes ahead with its announced plans to roll-out broadband service next year.
BT also faces competition from other telecommunications carriers when it loses its monopoly status.
"By 2001, BT loses the monopoly and prices should go down, making it very competitive. If companies (competitive carriers) are willing to subsidize it, it will be able to undercut cable modems," she added.
Freeserve PLC, the U.K.'s largest ISP (Internet service provider), may also look at offering users free ADSL services by the end of 2001, Solanke said. "By 2001, Energis PLC, (the competitive carrier that provides the network for Freeserve) will probably be looking into its own ADSL services," she said. Since Energis owns part of Freeserve, it would not be financially viable for it to begin charging Freeserve's customers for the service, she added.
A spokeswoman for Freeserve this morning was not aware of any plans for the company to offer ADSL services.