BSkyB to sell discounted no-frills broadband

The satellite broadcaster teams up with BT Retail to offer BT Broadband to its customers on special terms

BT Retail looks increasingly likely to dominate the UK's consumer broadband market in the future after securing a major marketing deal with BSkyB.

The satellite broadcaster announced on Wednesday that it had signed a deal that allows it to sell BT Retail's no-frills broadband package to its subscriber base. A commercial launch is expected before the end of the year.

Precise details of the tie-up are not yet available, but it appears that Sky's customers will be offered the no-frills product, called BT Broadband, at a discount.

"This agreement will ensure that Sky subscribers have access to a highly competitive offering as demand for broadband Internet access develops," said BSkyB in a statement of its latest financial results, adding that BT Broadband would be made available to customers on "special terms".

BT Retail generated controversy earlier this year when it announced that it planned to launch the no-frills broadband access product, with some ISPs claiming that it could put them out of business.

Unlike other broadband packages, a subscription to BT Broadband does not give users services such as free email or Web space. At £27 per month, BT Broadband is still more expensive than broadband services from smaller ISPs: V21 is to launch its £19.99 (inc. VAT) service on Thursday, and Pipex's broadband costs £23.44 (inc. VAT). BT Retail has remarked that it does not consider such steeply discounted prices to be sustainable.

However, BT Broadband is £3 per month cheaper than broadband from Freeserve or BTopenworld, and as ZDNet UK reported back in June, BT Retail is aiming to secure a massive chunk of the consumer broadband market.

Angus Porter, the managing director of BT Retail's consumer division, told ZDNet UK recently that he expected that by next summer some 50 percent of the UK's home broadband subscribers would be using BT Broadband.

"I think the (BT Wholesale's) target of one million broadband users by next summer will be met -- it's stretching but hardly daft -- and about half a million of them will be BT Broadband users," said Porter back in June, adding that he expected that BT Broadband would have at least 2.5 million subscribers by 2006 -- half of BT Wholesale's targeted five million ADSL users.

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