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Last Updated: Monday, 1 March, 2004, 11:06 GMT
Low cost broadband battle hots up
BT has launched a no frills broadband service to try to get more people to sign up for a fast internet connection.

The telecoms giant is hoping the 19.99 service will tempt people who already have dial-up to switch to broadband.

Cable company Telewest has also announced a new low-cost broadband service for 17.99 a month.

"Having a product that is affordable will tempt a lot of people to consider broadband," said analyst Ian Fogg of Jupiter Research.

Surfing limits

BT says the 512Kbps speed of its Asymmetric Digital Subscriber Line service is much faster than other cut-price offerings.

The BT Broadband Basic service imposes a 1GB limit on how much customers can download per month.

The 1GB cap is the equivalent of 20,000 web pages, 200 MP3 music tracks or 100 large software programs.

"This is plenty for half of all broadband users," said Duncan Ingram, Managing Director of BT Openworld.

"It is pretty generous and makes quite a significant difference to our economies," he told BBC News Online.

BT also says that the service is only suitable to be used by a single PC as it does not support home networking.

Price wars

BT currently has around two million broadband customers but has a target of five million by 2006.

There are a few very low bandwidth offerings, but we are not convinced that is the fairest or best deal for the customer
Duncan Ingram, BT Openworld
"We are confident it will play a big impact," said Mr Ingram.

Most people can get a standard broadband connection of 512Kbps for about 30 a month, although there are higher speed products available at a price.

Other internet providers such as Tiscali and NTL offer different broadband packages at a range of prices.

"There are a few very low bandwidth offerings," said Mr Ingram, "but we are not convinced that is the fairest or best deal for the customer."

BT Broadband Basic is 19.99 for direct debit customers and 20.99 for all others. There is also a start-up fee of 80, which includes the cost of a modem.

"We believe it is a sustainable price point," said Mr Ingram. "It is good value now and will be good value in two years' time."


One of BT's competitors, Telewest, is also looking to lure customers by offering bargain broadband.

Its 256Kbps service costs only 2 more than dial-up services from BT Yahoo and AOL, but offers surfing speeds up to five times faster.

"We're expecting demand from people who have previously considered broadband a big leap from dial-up and now getting on to the first rung of the broadband ladder will become a no-brainer," said Chad Raube, director of internet services at Telewest Broadband.

Smaller internet providers such as PlusNet have already been offering a 512Kbps for around 20 some time.

"It's encouraging to see someone else joining us in selling a true broadband product at under 20 and not just promoting their low speed, low priced broadband products, the emphasis on which only serves to confuse and take the whole market in the wrong direction," said Marco Potesta, marketing director at PlusNet.

Analysts believe that the new entry-level products from BT and Telewest could sway people who have been wavering about signing up to broadband because of the cost.

"People are very aware of price," said Mr Fogg. "There is no reason not to pay a tiny bit extra for a vastly superior service."

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15 Nov 03  |  Technology

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