BT works on broadband domination

BT's retail arm has muscled in on the ADSL broadband market with a service costing from £27 per month plus several extras for which it will charge more.

Available from June, the BT Broadband service offers ADSL access to the internet with downloads speeds of 512Kbps and upload speeds of between 64Kbps and 256Kbps.

Using existing phone sockets, users can plug in an adapter and an ADSL modem (costing £80), then connect the other end of the line into a PC and make their own arrangements for email, web space and all the other extras that internet service providers (ISPs) include in their charges.

Customers will see a simple launch page showing the brands of content and service partners such as Google.

BT will charge a £60 connection fee, although this can be incorporated into monthly bills. It also adds £1 per month if the user opts not to pay by either direct debit or monthly payment plan.

Rival offerings from Freeserve and BTopenworld, the telco's own ISP, charge £29.99 per month. Pipex and some brave smaller ISPs like Nildram undercut BT Broadband by up to £5 per month.

Before April, prices were at least £40 per month. "The price was so high it was eliminating demand," said Pierre Danon, chief executive at BT Retail.

BT Retail aims to have half a million new customers by next summer, and is to run an advertising campaign to help reach its target. "We will go big. It will probably be the most impressive campaign ever by BT," said Danon.

The bulk of the ads kick in from September, when BT is convinced it can provide sufficient quality support for its first wave of customers.

Angus Porter, managing director of BT Retail's customer division, admitted that BT wouldn't make much money from individual product sales. "The gross margin is about 20 per cent. The business case really builds when you add in the extra services," he told reporters.

BT wants to partner with service and content providers to make £1 a month per customer here and there for extras.

For the last two weeks, BT has been talking to all major ISPs but has so far persuaded only independent companies Clara.net and Plus.net to sign up.

Extras include virus checking services, email, web space, games and music downloads, and other content made possible by a new micro-payment scheme already popular in Germany.

BT also wants to sell wireless networking kit allowing customers to create home DSL-based networks.

The telco's micro-payment system will eventually allow users to have costs from 50p to £5 itemised on their phone bill, although initially customers will have to charge fees to debit or credit cards.

BT Retail said it has signed up 50 content partners in its first two weeks of negotiations.