BT's new high speed Internet and video service won't gain mass market acceptance unless it cuts its fees, companies planning to resell the service have warned.
BT yesterday announced a $250 million plan to upgrade 400 local exchanges with asymmetric digital subscriber line (ADSL) technology - which turns regular copper phone lines into "always on" high speed data pipes. (see Newswire 30 July 1999)
Several service providers, including BT's multimedia division, have announced plans to sell broadband Internet and video on demand services using the ADSL network. But some have questioned the high wholesale prices set by BT.
An entry level 512Kbps stream will cost service providers £40 per subscriber per month, while a high end 2Mbps stream will cost £150 per month. Retail prices must be set by the service provider.
UK Internet service provider and portal Lineone expects to launch an ADSL service early next year, VNU Newswire can exclusively reveal. It says its initial focus will be on providing content for the so-called 'early adopters'.
"The pricing is fairly high," said Ajay Chowdhury, managing director of Lineone. "For it to get mass market acceptance, it's going to have to come down to a reasonable level."
"The trick is what services are we going to provide for early adopters," he said. Lineone is developing a range of broadband content services with partners including ITN and wildlife video makers Survival. Online gaming is also going to be a major part of its initial service.
One of the first service providers to launch a service on BT's ADSL network will be Videonet. When it launches the service in October, Videonet says it will offer true video on demand, as well as constant Internet access.
But Videonet's marketing director Mark Springett said the wholesale prices were too high to pass on to consumers. "Consumers won't pay that. It'll kill the market before it gets going," he said.
BT will roll out ADSL to ten major UK cities announced yesterday. Roll out to other major cities, such as Bristol, Sheffield and Liverpool, depends on the success of the first stage.
"Further stages depend on the commercial take up," said Bill Cockburn, group managing director for BT in the UK. "If it goes as well as we all think, then within two to three years, 75 per cent of the country [by population] could be covered."
Despite the consumer focus of many of the services touted so far, such as video on demand, gaming and ecommerce, BT expects businesses to be major adopters of ADSL, for connecting home workers.
"We think this is an amazing opportunity for large and small companies. This technology now makes it possible for people to work at home and have access to the corporate intranet, voice and data and have video links so people don't feel isolated," said Cockburn.
BT says it costs it £10,000 per person per year to provide equipment and desk space for each of its office based employees.
Critics had earlier said BT was doing too little, too late, describing the ADSL launch as "more of a trickle out than a roll out." BT yesterday defended these claims.
"We're being pretty aggressive. Look around the world and try to see who else is committing to this degree," said BT's Cockburn.
Other service providers planning to launch ADSL services in the UK include AOL, Virgin and Microsoft. Cockburn said BT wants to attract "as many as possible."
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