BT woos Wi-Fi virgins

BT is making it cheaper for new users to use its wireless hot spots; will slashing prices boost demand?

BT announced on Wednesday it is cutting the cost of its Openzone Wi-Fi service for new users, effective from 1 September.

New subscribers will pay the reduced rate of £5 for 250 minutes per month or £15 for 4,000 minutes, for the first three months. After this initial period the tariff will return to the normal rate.

Currently users can expect to pay £10 per month for 250 minutes, whilst a 4,000 minute subscription costs £25.

Users will have to sign up before 30 November in order to get the promotional discount.

BT is seeking to encourage Wi-Fi take up, and is aiming the promotion at users who have not previously used any broadband wireless services. It is also targeting those who have been using pay-as-you-go vouchers. These vouchers currently cost £6 for one hour, £10 for 24 hours, or £40 for 30 days.

Lars Godell, principal analyst for Forrester, said the price reduction was "great news" for wireless broadband users. However, he thought that it would not encourage new users to take up wireless broadband in the short term, as price is not the only consideration. Businesses are concerned with security issues, and individual users are also concerned with privacy, Godell said.

"This dramatic price reduction is an important move within the Wi-Fi market and will probably trigger other price reductions," Godell said. He did not think that the net effect on broadband take up in the short term would be great, however, as there is a current lack of demand from consumers.

"The market for laptops is relatively small when compared with mobile and desktop markets. Only 15 percent of Europeans have a laptop," Godell said.

In a survey of UK consumers conducted in May 2005, only 7 percent used Wi-Fi at home, and only 4 percent used it at work. Twenty-two percent said they thought that they would use it in the future.

Godell thought that business users would continue to pay high prices, while general consumers would increasingly look for free broadband wireless access offered by businesses such as coffee shops and hotels.