Telecoms giant BT has reported a drop in profits but seen a big rise in demand for its high-speed broadband internet service.
"New wave" technology is helping BT transform itself
Pre-tax profits for the April to June period were £416m ($761m) down from £497m in the same period last year.
A decline in demand for fixed-line services was behind the profit dip.
But BT saw demand for its high-speed technology services rise by 32% and this part of its business now accounts for 20% of revenues.
Quarterly revenues for broadband internet services doubled to £186m, with 2.7 million customers taking up BT's packages.
Regulatory intervention, competition and price cuts have eaten into its traditional fixed-line business, BT said.
BT, which once had a dominant 70% share of the fixed-line market, now faces stiff competition from rivals such as Carphone Warehouse, OneTel and Sweden's Tele2.
These companies have snatched a chunk of the market from BT though enticing promotions offering free local calls or cheaper international rates.
Meanwhile, regulator Ofcom is breathing down BT's neck as it considers a break-up of the company as part of a strategic review of the telecoms industry.
The next quarter's figures will show whether BT's strategy of adopting a simpler pricing structure have paid off.
Its 'Together' packages were designed to fend off rivals, and, so far, a total of 119,000 customers signed up for BT Together in the last quarter.
The group is hoping for further customer interest after cutting line rental and call charges on 1 July.
Fewer customers defected during its first quarter compared with the preceding three-month period, BT reported.
The former monopoly lost around 100,000 customers in the April-June quarter, compared with more than 200,000 defections in the previous quarter, said chief executive Ben Verwaayen.
Meanwhile, net debt, which once was as high as £30bn, fell by 7% during the three months to £8.32bn.