BT accuses Freeserve of 'perpetual but redundant belly-aching'

BT insiders have slammed Freeserve's latest protest about BT's "no-frills" broadband product, insisting that the objection is not justified.

Sources within BT said that they regard Freeserve's complaints as "perpetual but redundant belly-aching", and maintain that they are not breaking any rules in the way they are promoting and selling BT Broadband.

Freeserve, though, is adamant that BT Broadband is bad news for the UK's broadband market. It has commissioned an independent report that found that retail broadband prices will fall slower in the UK if BT dominates the market, costing UK consumers £100m over five years.

Armed with this information, Freeserve formerly complained to Oftel about BT Broadband earlier this week. It has also appealed to the Competition Commission in an attempt to have another complaint against BT upheld, even though Oftel has already rejected it.

BT Broadband is offered by BT Retail. Unlike traditional broadband packages, BT Broadband does not include services like email, web hosting and security support.

The crux of Freeserve's complaint is that BT Retail is able to take advantage of BT's existing customer base of telephone customers to promote BT Broadband - something that BTopenworld isn't allowed to do. This, Freeserve claims, is the only reason that BT Retail, and not BTopenworld, is offering the product at all.

"With more than 70 per cent of the residential telephony market, BT Retail is able to exploit huge unmatchable advantages over other ISPs, including marketing its 'no frills' broadband product on 19 million phone bills and via 13 million calls to its customer support line every quarter," said Freeserve in a statement.

"Freeserve points out that it is because of these unmatchable advantages that 'no frills' is being offered by BT Retail rather than BT's Internet subsidiary BTopenworld, which is not allowed to use BT's fixed line phone business as leverage," the ISP added.

Oftel has already said that BT is allowed to advertise BT Broadband within its telephone bill, but that it cannot use billing information from its telephony customers to target its marketing of internet services to residential consumers.

BT has already made it clear that it is aiming to dominate the UK's consumer broadband market with BT Broadband. But sources within the telco claim that Freeserve's latest complaint shouldn't be taken seriously.

"After all, they come from a company whose parent company dominates the French broadband market. This is in stark contrast to the UK, which is probably the most competitive broadband market in the world," said one insider. "Given this situation, it is amazing that Freeserve has the cheek to launch these complaints," he added.

Freeserve is owned by Wanadoo, which is itself part-owned by French telephone giant France Telecom.

It is understood that BT does not accept Freeserve's claim that UK consumers will be £100m worse off if BT dominates the broadband market.

Earlier this year, Freeserve claimed that BTopenworld had been tipped off about February's broadband price cuts and is being subsidised by BT. Oftel rejected this complaint in June, but Freeserve appealed to the Competition Commission about this ruling on Tuesday, and is hopeful that Oftel's ruling will be overturned.

Graeme Wearden writes for ZDNet UK