BT broadband targets: the sums don't add up, say analysts

No-way-en, Verwaayen...

Despite this morning's significant price cuts, broadband uptake in the UK will remain sluggish, according to leading analysts. And if they're right, BT's finances could take a beating. BT is hoping user numbers will hit the first million by summer 2003, two million by 2004 and around five million in 2006. The telco needs these number to materialise to get payback from its upfront investment and ongoing costs. But not everyone is convinced by these projections. Giga Web analyst Bernt Ostergaard said: "The growth of this stuff in the UK should not be overestimated. I doubt BT will hit these targets of 20 to 25 per cent of the UK population using ADSL by 2006. I believe it will top out at around 10 to 15 per cent." Lars Godell, European telecoms analyst at Forrester Research, said a study by his company into the number of broadband users in the UK by 2006 shows BT's growth estimates are too high. Godell said: "We think BT's prediction is optimistic. We believe there will be approximately six million broadband subscribers in 2006, but DSL will not have 100 per cent of that take up." The research from Forrester shows it expects almost six million households to have broadband in 2006, but only 3.5 million will access the technology over DSL. Cable will account for just under two million users, and other channels such as satellite and fibre will account for nearly 600,000. BT Group's new CEO Ben Verwaayen said the company expects to get the majority of broadband users - 60 per cent - from customers replacing leased lines, ISDN lines, existing Home Highways and second lines, with ADSL. He said BT expected 35 per cent of revenue to come from users implementing ADSL in addition to current lines and five per cent from entirely new customers. The company announced this morning that it will cut its wholesale consumer broadband prices to £14.75 from 1 April. The price of BT Wholesale's main consumer product to service providers (BT IPStream 500) will drop from £30 a month, or £25 a month for the recently introduced self-install version (BT IPStream Home) to £14.75 for both. Rental for existing ADSL wholesale customers of these services will also drop to £14.75.