BT unveils no-frills budget broadband

BT Retail hopes its budget broadband offering will attract half a million new customers by summer 2003, and has built in a micropayment service to help

BT announced on Wednesday morning that its cut-price broadband product will cost £27 per month -- more expensive than some observers had expected.

The service, which will be called BT Broadband, will give users a high-speed Web connection, but will not offer any of the additional services that are normally offered by Internet Service Providers. It will go on sale this autumn, after being trialled over the summer.

Users will also have to buy an ADSL modem, which will cost in the region of £80.

BT Retail -- the division that will sell BT Broadband -- is aiming to recruit 500,000 subscribers by next summer.

"We are offering a suite of new ideas to allow as many residential customers to get connected to broadband as easily as possible and at an affordable price. We are making it simple for customers to get the most out of the Internet in a way that suits their own interests," said Pierre Danon, head of BT Retail, in a statement.

"These moves are all about providing our customers with the services they have told us they want -- faster direct access to the Internet, integrated sales and service and real choice of compelling content and online services. We intend to keep broadband direct, simple and fun for the customer, which should also be good news for content and service providers," Danon added.

According to reports, BT is in talks with AOL about forming a broadband partnership to promote the new package, although BT did not mention the deal in its announcement. The company did say that it has agreed content deals with several organisations, including, UKonline, MSN, Yahoo! and Google.

BT claims that the product is the first "complementary alternative to the ISP business model" and will provide customers with more choice. Some ISPs, though, are concerned that BT is attempting to win a monopoly over the UK's broadband market.

At £27 a month -- if paid monthly or by direct debit -- BT Broadband will be £3 per month cheaper than the broadband offerings of ISPs such as Freeserve and BTopenworld.

However, it will still be more expensive than the high-speed Internet products that are available from some ISPs. For example, Pipex is charging around £23.50 per month for its broadband package.

BT is also pushing a secure micropayment system to let customer pay for online content and services, which it claimed would be ideal for low cost items such as games and music downloads.

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