BT goes on broadband price offensive

BT outlined an aggressive pricing strategy for its new superfast broadband service yesterday in a move it hopes will enable it to poach rivals' customers.

Britain's leading fixed-line telephone company said consumers would have to pay £20 per month for its high-speed broadband service based on optical fibre.

The £20 offer is £8 cheaper than a similar broadband service provided by Virgin Media, the cable television operator and currently BT's only rival in high-speed internet access.

UK broadband speeds lag behind those in many other industrialised countries. BT is responding by spending £1.5bn on a new fibre network.

John Petter, an executive at BT's retail unit, said the pricing of the superfast broadband service would ensure it became a mass-market phenomenon.

"The name of the game for BT is getting customers to come back to BT for all their services," he added.

At 29 per cent, BT's share of the broadband market is relatively small compared with many of Europe's other former fixed-line phone monopolies.

BT's fibre network will provide customers with download speeds of up to 40 megabits per second, which is 10 times faster than the current industry average.

The network will support the increasingly popular activity of watching video in high definition.

Analysts say BT's aggressive pricing may prompt rivals such as Carphone Warehouse and BSkyB to sign wholesale deals with the company. If agreements are reached, these two groups would get access to BT's fibre network in order to supply high-speed broadband to their customers.

BT's fibre network will run past 40 per cent of homes by mid-2012, mainly in towns and cities. The company is willing to consider extending this to 90 per cent of households with public funding.

The government has proposed a 50p per month tax on telephone lines to finance superfast broadband infrastructure in rural areas. The Conservatives have opposed the levy.

By Andrew Parker, Telecoms Editor Published: January 22 2010 02:00 FF.com

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