BT to pay ISPs to run broadband adverts

Millions of pounds will be handed back from BT Wholesale to its ISP customers, so they can advertise their high-speed Internet services

BT Wholesale is preparing to give millions of pounds to Internet Service Providers (ISPs) to help them to advertise their ADSL packages.

The move is an attempt to boost the take-up of broadband in the UK, which has been extremely disappointing so far. By encouraging ISPs to advertise broadband services that they offer, BT is hoping to stimulate demand for ADSL.

ISPs have known about the scheme since mid-December, and BT Wholesale has received plenty of interest. "The amount of money available will run into the low millions of pounds altogether," a BT Wholesale spokesman told ZDNet UK News. It's possible to buy ADSL from around 190 ISPs in the UK, all of who resell BT Wholesale's broadband products.

BT Wholesale will not be willing to pay for an advert unless it clearly promotes ADSL. "As long as the advert is specifically for broadband, and not just a generic ad for the company, money could be available," said the BT Wholesale spokesman. The company is also not prepared to pay the whole cost of a campaign.

In effect, BT Wholesale will be subsidising rivals of BTopenworld, the consumer arm of the telco. "We're not allowed to treat BTopenworld any differently than other ISPs, and this move proves that we take that seriously," the BT Wholesale spokesman explained.

"It's a bit like Intel Inside for DSL", said one industry source, "and whether BT will similarly insist on some sort of 'BT Behind' branding in exchange for the money remains to be seen. Other interesting questions are whether Oftel will regard this as some form of cross-subsidy, especially if BTopenworld benefits from this plan, and why BT doesn't just use the money to drop the price of the service."

BTopenworld is by some distance the largest ISP offering ADSL in Britain, and would undoubtedly benefit from a rise in the public profile of broadband.

BT has repeatedly insisted in the past, though, that it cannot drop the price of broadband -- because the regulatory framework bans it from selling a product at a loss.

There are currently only 100,000 ADSL customers in the UK. This is despite BT making over 1,000 of its local exchanges ADSL-enabled -- covering over 60 percent of the country's population.

Many industry observers claim that the pricing, at around £40 per month, is simply too high for a mass-market consumer product, but a lack of public understanding about broadband is also blamed. BT Wholesale's move seems certain to result in a significant increase in broadband advertising, and could well help to boost demand for ADSL.

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