Sky unveils broadband service

Posted on 18 Jul 2006 at 12:09

BSkyB has launched its new broadband internet access service, Sky Broadband, available to customers of its digital satellite TV service who are covered by the company's broadband network.

The service comprises three products: the free 2Mbps Broadband Base; Broadband Mid which costs £5 a month for 8Mbps and a, relatively high, 40GB monthly usage limit; and for £10, Broadband Max, with speeds up to 16Mbps and optional free engineer-installation (costs £50 for other packages).

Sky's Net ambitions have been no secret since it acquired networks company Easynet for £211mn last year, giving it a considerable slice of the burgeoning LLU market.

Sky's network now covers 28 per cent of UK households although the company says all Sky customers are eligible for the service. It is currently rolling out its equipment in around 30 exchanges a week and claims that at the current rate of expansion the network's coverage is expected to reach more homes than the entire cable industry by early next year and 70 per cent of all UK households by the end of 2007. Sky will also look into replacing customers' BT voice lines, with quality testing scheduled for later this year and a full service rollout in early 2007.

Advance registration for Sky Broadband begins at noon today at sky.com/broadband, with sales due to begin in August.

All Sky Broadband products come with a free wireless router. PC users can also get a year's free subscription to McAfee Internet Security Suite while Mac users will get 12 months free McAfee Virex software (not that they need it). All users get a sky.com email addresses and access to the Sky Broadband personalised portal, featuring a personal address book, search, photo management and access to on-line entertainment services such as recommendations, Sky+ Remote Record and movie and sports clips.

Sky Broadband is a compelling product which rewards our eight million customers with a quality service offering flexibility and great value,' said James Murdoch, BSkyB chief executive. 'Sky is ideally equipped to enter the large and growing markets of broadband and telephony and by pushing the boundaries of the home entertainment market, we will help our customers realise the full potential from technological convergence.'

The company expects to take an operating hit of around £400m over the next three years, but expects the broadband division to go into profit in 2010. However, the upside of rolling out broadband is an opportunity to increase customer loyalty and grow market share.

Sky's estimates for UK market revenues in 2010 predict that advertising will continue to be the major growth area for the Internet at £4.1bn, whereas subscriptions will rule in the TV space at £5.2bn. By that point it expects to have more than 10m subscribers, 25 per cent of which have signed up to the premium Sky+ service.

The likely impact on the broadband market is unclear, though this announcement increases the pressure on smaller ISPs already struggling with narrower margins as prices fall and competition from other broadband-and-more services such as Carphone Warehouse's TalkTalk.

Author: Simon Aughton