BT launched a wholesale satellite broadband service for rural communities on Wednesday, but has received a subdued response from UK Internet service providers, some of whom have already indicated they don't plan to sell it.
The product will provide a two-way connection to the Internet at speeds of up to 500 Kilobits per second. It is aimed at small businesses and advanced home users who need a broadband connection but can't get ADSL or cable.
It will be considerably more expensive than other broadband options, though. The equipment will cost at least £699, on top of which the installation will cost £250.
Once up and running, the single-user option costs £46.99 per month, and the multi-user option -- with support for a local area network -- costs £85.99 per user per month. As these are the wholesale prices that BT will charge ISPs that resell the service, actual customers will probably pay even more.
This is likely to limit take-up of the service, according to some ISPs.
"The cost to the end user is highly prohibitive, and customers who can afford to pay are most likely to be businesses with existing fixed connections such as leased lines," said Alistair Wyse, service and operations director at PlusNet.
One well-known issue with satellite broadband is latency. Packets of data have to travel from the end-user up to the satellite and then down again to the Internet, and this journey involves a slight delay, typically 750ms or more. Although not a serious problem when surfing the Web or using email, it can interfere with VPN software and hamper online gaming.
This will deter some ISPs from attempting to sell BT's service, which uses capacity on Intelsat's IS-907 satellite.
"It's not for us. You can't bend the laws of physics, so you've always got the problem of latency," explained one leading UK ISP.
BT has said that its retail arm will be the first ISP to sell the service. It's actually been selling a satellite broadband service since 2002 but a BT spokesman says that this new option is an improvement on what's been available from BT Retail before.
Currently about 10 percent of the population can't get broadband from BT, NTL or Telewest. On top of this, some 2 or 3 percent of people who are in an ADSL-enabled area can't get the service because they live too far away from their local exchange or their phone line is of too poor quality.
BT is currently testing a way of extending the reach of ADSL from 6km to 10km, in a trial at Milton Keynes, and Wyse believes this is a better way of addressing the broadband divide than through satellite.
"Although this satellite product fills in the gaps, the real win for broadband is extending the reach; for example, the Milton Keynes trial, in which PlusNet [is] participating, and extending the distance at which 2Mb connections can be serviced," Wyse said.