Freeserve hikes ADSL

May 16, 2001
Web posted at: 1423 GMT

LONDON (CNN) -- The UK's leading Internet service provider Freeserve has raised the price of its high-speed ADSL service by 25 percent to £49.99 a month.

The ISP blamed incumbent British Telecom and regulator Oftel for the rise. It said it had no confidence in either of them driving down the wholesale price to a level that would mean the large-scale take-up of broadband.

Broadband Internet access for consumers and businesses has been a priority of the Labour government. But BT, which owns the copper wires that pass by 90 percent of homes and businesses,  has stopped targeting the consumer market with its own ADSL service that utilizes this "local loop".

Freeserve has to buy its ADSL product wholesale from BT but said itself and AOL, the other leading ISP, had been complaining vociferously about the way BT allocated capacity and its lack of service guarantees.

The UK suffers from some of the highest ADSL prices in the world and among the lowest rates of broadband rollout.

But analysts see the Freeserve price rise from £39.99 to £49.99 a month as inevitable whatever the merits of its case against BT.

"Prices are going up quite fast for ADSL around the world – from 250 to 325 kroners in Sweden and Verizon in the U.S. put its prices up from $40 to $50 recently," says Rupert Wood of the telecoms consultancy Analysys.

"There has been a price war to maximise market penetration, but the sector can't afford to do that for any length of time and I would expect further announcements of this kind to be made."

Freeserve cuts off users – Oct. 10, 2000

Freeserve

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