NTL's wholesale deal with Freeserve may be the first of many and will step up the pressure on cable rival BT.
Earlier this week, NTL became the first UK cable company to open up its network to a rival internet service provider (ISP) by signing a deal to deliver Freeserve Broadband via NTL's cable network.
The agreement will enable Freeserve to deliver a 512Kbps broadband cable modem service to customers provided they ditch their BT accounts for NTL's cable telephony offering. The service will be available later this year.
Analysts said that the agreement should pave the way for other ISPs to sign similar deals with NTL and other cable operators, and will put further pressure on BT which previously said it plans to achieve one million broadband connections over the next 12 months.
NTL, which said it signed its 200,000th broadband customer this week, confirmed that the deal is not exclusive. "We are constantly in talks with other ISPs," explained a spokeswoman.
Nicholas Blades, principal consultant at telecoms analyst Schema, said: "The principal reason for this deal is NTL trying to extract as much cash flow as possible from its asset base.
"Now they will not have to rely totally on their own marketing base, they can use Freeserve's too."
Adding that it would not be long before other ISPs follow suit, Blades stated: "We won't have to wait long for AOL to sign a similar deal.
"It is using cable in the US, so I don't see why not. It's no secret that it had discussions with NTL when it was looking for re-financing.
"The competitive impact on BT is interesting. If there is co-coverage everywhere then BT may not be able to rely on other service providers. One million [broadband] connections in a year is BT's target.
"If AOL has 40 per cent of the internet market and the price is coming down to be of interest to general consumers, then this will impact BT."
He explained that BT will have to get better at selling broadband "as it won't be able to rely on the marketing skills of other ISPs".
Despite Blades's predictions, AOL said it had nothing to announce and no current plans for a similar deal.
Telewest, the UK's second biggest cable company, said that, although it had been in discussions with several ISPs including Freeserve, it had "no immediate plans" to open up its own broadband networks.
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