BT launches ADSL but says prices will not fall

BT launches its ADSL service Wednesday but claims the £40 price tag will not fall

Launching the service under BT's newly-formed Internet business BTopenworld, the telco aims for UK "leadership in the second Internet wave". With a £39.99 monthly charge and a £150 installation fee -- waived if users sign up by June 30 -- experts argue the product is not yet ready for the mass market.

BT (quote: BT) however remains bullish. "People are going to be very happy to pay that amount of money," claims chief operating officer of BTopenworld, Ben Andradi. The price looks unlikely to fall. "Why should prices fall?" asks BT openworld's chief executive Andy Green. "It will be like the PC market. People will always pay £1000 for a PC and will just get more with it."

With BTopenworld users will get always on, high speed Internet connection, with connection speeds of 512kbps downstream and 256kbps upstream -- between ten and twenty times faster than conventional modem access. BT has formed partnerships with over 50 content providers, including Reuters, QXL, CNN and ZDNet UK. The service will go live in July.

Launching the service, BT chairman Sir Peter Bonfield claims broadband changes the rules of the Internet game. "It changes the dynamics. With broadband it is always on, always available and always personal."

The telco is expecting one million users to sign up for the service within the first two years and the service will be enhanced in the autumn with Video-on-demand available from early 2001. ISDN users will get a free upgrade and BT Internet customers will be able to keep their existing email addresses. In deals with PC manufacturers Hewlett-Packard, Apple and IBM PCs will come with BTopenworld pre-installed.

Business users will also be able to take advantage of the service, although firms wanting multi-user services will have to pay £99.99 per month with a higher installation fee of £260.

Initially the service will be heavily subsidised with BT increasingly reliant on e-commerce and advertising revenue. "We will take a hit in the first instance but will break even within a year or two," says Green. According to a survey from research firm Mercer Management, people spend far longer online with broadband compared to narrowband -- 1800 minutes per month with broadband connection compared to 450 minutes with narrow band. Spending also increases according to the research -- £37 average spend per month with broadband compared to £15 with narrowband.

The telco is expected to employ other technologies such as wireless fixed access and satellite to roll out ADSL services across the UK. By July 2002, 70 percent of Britain will be ADSL-enabled.

BTopenworld - What you need to know:

How much?

  • £39.99 to consumers inclusive of VAT. One off installation fee of £150 (though if you rush to get it installed before June 30, the installation fee will be waived)

  • £39.99 to single business users exclusive of VAT

  • £99.99 to multiple business users exclusive of VAT. One off installation fee of £260 exclusive of VAT

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