Britain's telecoms regulator Oftel has ordered BT Group to cut its charges for wholesale internet access.

Oftel said it had told the phone company to reduce its prices by 17% following an investigation into unmetered access.

The investigation had concluded that BT had been charging operators for certain call routing and call management measures for dial-up access which were no longer necessary.

The price cuts could have a knock-on benefit for consumers if operators pass on the savings to internet service providers such as AOL, Freeserve and Thus.

But Ian Fogg, an analyst at Jupiter Research, said the price change affected dial-up access so would have no effect on broadband access, the increasingly popular form of internet connection.

"In fact cheaper unmetered dial-up products could slow the growth of broadband if they are passed on to consumers," he told BBC News Online.

Passing on savings?

The Internet Service Providers Association agreed that customers would not necessarily benefit from any price reduction.

"It's only going to affect the operators," said ISPA's Brian Ahern.

"It is not a given that they will pass it on to the ISPs (Internet Service Providers). Because of the high level of competition in the UK, they have been operating at very low margins for some time," he told BBC News Online.

A spokesman from AOL said they would benefit from a small reduction in costs, if operators chose to pass on the savings to ISPs.

But he said BT's reductions would only affect one part of the total cost, and the filtered down reduction to customers minimal.

"We're talking pennies, over the space of a year the most you'll see is a couple of pounds."

The investigation was opened following a complaint from Cable & Wireless, one of BT's rivals.

"The action taken today ensures that BT continues to recoup the cost of providing wholesale internet access, and that UK consumers continue to benefit from one of the world's most competitive dial-up internet access markets in the world," said Oftel director general David Edmonds.

Oftel said improvements in late 2001 meant BT no longer needed to use one of its own types of networks to manage dial-up traffic.

But it said BT still charged for using that network in its wholesale dial-up pricing plans, even if some wholesale buyers did not require that service.