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Friday, 26 April, 2002, 10:43 GMT 11:43 UK
BT's broadband domination plan
Hand on mouse
BT is hoping millions of Brits will click on broadband
BT has set itself ambitious targets for broadband in the UK which include selling consumers a whole internet package - with the PC thrown in as well.


The announcement raises the spectre that BT could enjoy a further anti-competitive advantage

Freeserve statement
The telecoms giant intends to dominate the broadband market in Britain.

It is determined to connect five million UK consumers to broadband by 2006, generating net revenues of 490m by 2005. BT hopes the all-in package will help it achieve its goals.

The idea is that an engineer will come and install a Toshiba PC which, together with the technical support and other services, will be part of a monthly fee.

More details will be announced in the autumn when the package launches.

New model under fire

Crucial to this plan will be BT Broadband, its radical new model for internet access which cuts out the need for an internet service provider (ISP) and divides the internet market for the first time into a basic access model with content, such as e-mail, provided separately.

This is a worldwide first and has already drawn fierce criticism from ISPs.


27 is the absolute lowest price you can have if you want to respect your share-holders

Pierre Danon, BT Retail
"The announcement raises the spectre that BT could enjoy a further anti-competitive advantage," said rival Freeserve in a statement.

Oftel, the telecoms watchdog, insists the service is within BT's licensing agreement and, because BT offers a wholesale version of it, is not anti-competitive.

Jupiter analyst Dan Stevenson questions this.

"It is clearly not a wholesale product because by definition is it being sold direct to customers," he said.

Mr Stevenson also asks why BT would want to offer a service which effectively competes with its other broadband products.

Cheap as possible

And others have questioned why consumers would want to pay 27 for a stripped-down ADSL product, when other service providers such as Pipex offer a cheaper full service.

BT defends its pricing and suggests that ADSL is unlikely to fall below that level.

"There are some funny guys with some funny business models. 27 is the absolute lowest price you can have if you want to respect your shareholders," said BT Retail chief executive Pierre Danon.

He also advised other ISPs to seriously consider their business plans for the future and make a choice about whether they wanted to be in the access or content market.

"We asked ISPs if they wanted to come on board with us. Freeserve has said it doesn't want to play as it has a good high street deal with Dixons. AOL may have to think about whether it is playing in content or access," he said.

BT has no intention of abandoning its share of the content market and is determined to push the pay-for-content model, announcing a micropayment service in conjunction with German firm Firstgate.

Initial partners include BTopenworld (BT's own ISP) and hangbag.com. Consumers will pay small fees for music, games and other net content, and payments will be made via a credit card with BT making it available as part of its billing system as soon as possible.

Remote businesses

Getting more businesses on board the broadband bandwagon is also crucial to BT's long term strategy.

It is currently connecting around 2,000 small businesses to broadband every week and has announced plans to enable a further 600 exchanges and set up 10 more partnerships like the Act Now scheme in Cornwall.

Under the scheme, Cornish companies can choose from a range of ADSL packages, starting at 34.95 a month.

The project is partly funded by money from the European Union.

See also:

24 Apr 02 | Business
BT launches direct access broadband
23 Apr 02 | Sci/Tech
Telewest offers super-fast broadband
19 Apr 02 | Sci/Tech
Broadband comes to the High Street
17 Apr 02 | Sci/Tech
Rural residents demand broadband
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