BSkyB to Bundle Free-for-All Broadband
BSkyB Tues. surprised U.K. telecom competitors with a Pounds 400 million, 3-year plan to bundle free high-speed Internet service for its satellite TV customers. Taking on giants BT, NTL and France Telecom, BSkyB said it aims to have 3 million broadband customers by 2010, providing broadband via Easynet DSL. The DBS operator, 38% owned by News Corp., is known as a pay-TV pioneer willing to bet high on the future of the TV and telecom markets. But Sky shares dropped by around 4% on the NYSE after the announcement.
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“Too many people have been paying too much for broadband for too long,” BSkyB CEO James Murdoch said at a Tues. press conference. The effort’s costs will pay off by increasing customer loyalty and enabling video-on-demand for BSkyB subscribers, Murdoch said.
The free service, available to customers subscribing to any BSkyB TV offerings, will run at 2 Mbps, officials said. Other packages, with up to 16 Mbps of bandwidth, will cost up to Pounds 10, officials said. Around 50% of homes in the U.K. can expect 8-16 Mbps speeds, they said. Home installation by engineer is free with the maximum package, Pounds 50 for the others. All customers get a free wireless broadband router and a year of McAfee Security service, they said. Non-TV subscribers can pay Pounds 17 for Sky broadband at 8 Mbps. For Pounds 5 per month, BSkyB will offer unlimited VoIP fixed-line phone calls within the U.K., officials said.
The move comes as other U.K. telecom groups bundle free or cheap broadband with their services, and as triple-play competition heats up in Britain and the U.S. Orange, the wireless operator owned by France Telecom, is offering free broadband to its mobile customers. Carphone Warehouse said it will offer free broadband with unlimited national phone calls for Pounds 20.99, including line rental. BT plans to launch IPTV for its broadband customers this fall.
BSkyB officials disparaged competing broadband offerings, saying they're tricky. “The services which have recently launched, promising cheaper broadband, are tied up with all kinds of catches and conditions,” said Brian Sullivan, BSkyB dir.-new products & sales.
The satellite TV firm’s entry into the broadband market is made possible by its 2005 acquisition of Internet service provider Easynet for Pounds 211 million. BSKYB officials said 28% of households already are covered by the network, thanks to local loop unbundling of BT’s network. Half of U.K. homes should be covered by Christmas, and 70% by 2007, officials said. The new service uses BT’s exchanges and lines under U.K. law in competition with AOL, Orange and other firms, officials said.
The broadband launch is backed by a multimillion-pound marketing campaign with the slogan: “Uploads, downloads, save loads.” The campaign includes TV, print, online and radio ads plus “special building wraps,” BSkyB officials said. Letters will begin going to BSkyB customers today (Wed.), they said.
BSkyB expects most subscribers to get the free service, officials said. But in time the DBS operator will try to convert customers to higher bandwidth plans more suitable for movie downloads. Murdoch said it will start offering an integrated IPTV service at the end of 2007. Murdoch said BSkyB’s set-top boxes also are rigged for the broadband plan. The new Sky HD box is the satellite firm’s first hybrid device, he said, with MPEG-4 and an Ethernet socket. Said Murdoch: “All future Sky receivers will be hybrid. In 2007 there will be software that lets subscribers plug broadband into their satellite receivers. We can then offer video on demand and gaming.”