BT: There's a hole in our business model

NEWS BT Openworld buzzed with talk about a price hike following comments by chief executive Andy Green. Various stories in the press revealed Green's comments that the business model for broadband hasn't worked out how it should, and concluded that the company must be considering a price hike on its DSL services to plug the gap. Openworld lost £227m on turnover of £167m, and the revenues from advertising and ecommerce - expected to make up some of the difference - have not materialised. The conclusion that this will force BT to charge the customers more is a logical one. Freeserve increased its DSL charges last month by £10. However, BT's official position is that no decision has yet been made on this issue. A spokesman said: "We've always made it clear that in the market we have always got to review our portfolio and prices." DSL is already a very costly service, and a price increase will make it even less attractive to customers. At £40 a month or more, ADSL is already significantly more expensive than rival broadband services via cable modem, which costs as little as £25. Openworld's Green denies saying that if the cable companies "have got their sums right, they will gain a large amount of the market", as quoted by BBC Online.