BT to sell cut-price broadband product

BT Retail looks set to undercut the UK's broadband Internet Service Providers by selling a "no-frills" product that will give users a fast connection to the Web without the additional services and support often provided by ISPs.

Few precise details of the product are currently available, but a BT spokesperson told ZDNet UK that the product could be on sale by June this year, following customer trials.

Customers who sign up for the product -- which BT has described as the broadband equivalent of a budget airline -- will not receive services such as Web site hosting on an ISP's server, email services or technical support. It is possible that this will allow BT Retail to significantly undercut other broadband products.

BT sells broadband connections to ISPs -- including BT Retail -- for £14.75 per connection per month following the recent price cuts. BTopenworld and Freeserve add email, Web space and support to this, and charge consumers £29.99 a month. BT Retail would almost certainly offer the vanilla broadband connection for significantly less than this, and possibly less than the £23 that some other ISPs charge for the value-added broadband packages.

According to BT Wholesale, ISPs were offered the no-frills product in March but they all -- including BTopenworld -- declined to buy it. Only BT Retail, with its user base of 19 million customers, has decided to take it up.

"We're not trying to block out ISPs with this product," a BT spokesman told ZDNet UK News on Monday. "It will only give high-speed access, so users will be able to move from it to an ISP if they want extra services. We think this will encourage ISPs to create compelling broadband content."

"This product is the EasyJet of broadband," the BT spokesman added, referring to the airline that has made a success of providing cheap flights without supplying the extras normally associated with air travel. "We just provide a connection. ISPs will be able to tell customers that they will also offer the food and the wine."

About 200 UK ISPs resell BT Wholesale's range of broadband services. While its partnership with Time Warner means that AOL -- expected to launch a broadband product this summer -- will have access to a massive film and video catalogue well-suited to high-speed Internet connections, smaller ISPs seem certain to struggle to compete.

BT denies that its no-frills product would harm smaller ISPs, and insisted it is an attempt to resolve the problem that while it is hard to create broadband content without large numbers of potential users, people still need a reason to upgrade their Internet connection. "We hope that they (smaller ISPs) will be able to offer lots of compelling services," insisted the BT spokesman.

Further details about BT Retail's "no-frills" product will be revealed on 24 April.

BT has already informed telecoms regulator Oftel of its plans, but as the product is only at the trial stage Oftel would not intervene. A decision on whether BT is allowed to offer the product will have to be made once the telco announces firm details of a commercial launch.

BT also said on Monday that it plans to upgrade another 100 local exchanges so they can offer broadband connections.

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