Rural broadband set at twice the price

BTopenworld has set its price for rural broadband, but users will have to pay aminimum of £899 to be hooked up to the satellite-based service.

Working with US satellite provider Gilat, BT has initially launched the service in the Scottish Highlands and Islands region, and Northern Ireland.

Single users will have to pay £69.99 per month for a 500Kb connection. The cost increases to £139.99 a month for four-user connections, who will have to pay £1299.

Typically, ADSL costs £35-£45 per month plus £75-150 installation, and cable broadband £25-£35 per month, with free installation.

Highlands and Islands Enterprise, the development agency for the region, has promised to invest £250,000 to help local businesses meet the high installation costs.

BT said it is still in discussions with the Northern Ireland Industrial Research and Technology unit over similar subsidies.

But analysts believe take-up will remain low.

Alan Pyne, director at Schema, said: "At those prices, it's difficult to see it as anything other than an amazingly niche market."

"It is steep," agreed Dario Betti, analyst at Ovum. "But satellite is expensive and won't compete with ADSL and cable. It can be used as a filler for those firms waiting for ADSL and cable services to be rolled out in their area, and there are firms ready to pay the cost."

Previous attempts to connect rural businesses and homes to broadband technology using microwave transmitters have failed, triggering the move to satellite. Rural surroundings make it difficult to install ADSL or cable lines, with many small businesses losing out as a result.

Tony Harris, senior vice-president at BTopenworld, commented: "We know from research that companies who use broadband enjoy real business benefits, and this will mean even more companies will be able to enjoy these advantages."

BTopenworld's partner Gilat is also working with rival ISP Tiscali on a similar service, which is expected to launch in the UK, Italy and Germany later this year.

Dutch firm Armiska plans to launch in the UK early next year using technology from Alcatel that offers download speeds of 8Mbit/s and upload speeds of 2Mbit/s.