High-speed Net access from the blueyonder

Cable company Telewest (quote: TWT) officially launched its cable modem broadband Internet service on Thursday, promising to roll out ADSL nationwide at a later date.

blueyonder -- as the broadband cable service is dubbed -- was inadvertently publicised ahead of its official launch when details of the service leaked onto Telewest's Web site last week. It is only the third company to announce broadband services in the UK -- Kingston offers ADSL broadband via TV, while rival cable company ntl offers cable modem services.

Unlike its narrowband cousin SurfUnlimited, Telewest's £10 a month unlimited narrowband Internet service, the company won't undercut BT (quote: BT) with blueyonder. In fact, users will have to pay £50 a month. Telewest's chief executive, Tony Illsley, admits this price will have to come down as ADSL rolls out. "As other products come into the market, we will have to be competitive," he said. Telewest claims price reviews could happen by autumn.

Telewest intends to push full steam ahead with its broadband rollout, and according to Illsley, will offer a nationwide service using ADSL -- based on a current trial with BT -- as soon as it is viable.

blueyonder offers users bandwidth of up to 512MB/sec, which is 15 times faster than narrowband access. In the summer, Telewest will roll out a blueyonder portal, complete with live news and sport videos, a live stock price ticker, instant downloads of music and books, as well as online betting.

Illsley used the launch of blueyonder to apologise for SurfUnlimited, which collapsed days after going live due to sheer demand. "In all honesty, we didn't forecast the demand for it," he said. "We forecast 120,000 subscribers by the end of the year, and we went from 55,000 to 100,000 within a matter of days."

To make amends to frustrated users, Illsley said Telewest had refunded them for the first month's subscription. It has also tripled capacity. To avoid similar problems with blueyonder, the rollout will be staggered, starting in Kent and Essex and rolling out progressively in Telewest's other areas.

Illsley also accepts that SurfUnlimited has been overshadowed by the completely free Internet offers from AltaVista and rival cable operator ntl. "We are not automatically jumping to the conclusion that we have to offer SurfUnlimited free, but clearly we will be reviewing the price," he said.

Critics have questioned Telewest's price structure, particularly as the £50 a month deal won't include voice calls. Users will also have to pay extra for the interactive TV service Telewest launches alongside blueyonder.

Ovum analyst Tim Johnson was not surprised by the price of blueyonder, but added it is not yet at mass market level. "Fifty pounds is the current going rate for broadband. For the time being it will satisfy keen, early adopters. The price will fall within a year, depending on how rapidly things move and how the competition gets going," he said. Johnson believes Telewest will have to wipe £20 off the current price tag before it sees its broadband service adopted by the average consumer.

Alongside blueyonder, Telewest will roll out additions to its digital TV service. TV email, banking, shopping with 17 high street stores, interactive entertainment and a review guide will be added to the service. Video-on-demand will be introduced in the summer.

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