Sky joins the crowd with 'free' broadband

Sky became the third operator in the U.K. to launch a free broadband offering to its TV subscribers.

British Sky Broadcasting Group this week introduced a free broadband service in the U.K., becoming the third operator in the country to market free broadband as part of a bundled offering. But don't expect the same type of offering in Australia.

Subscribers to Sky's digital TV service can sign up to receive a 2M-byte broadband connection that includes 2G bytes of usage per month for no extra charge beyond the monthly TV charge. The offering is initially limited to the 28 percent of U.K. homes that are reached by Sky's broadband network.

Sky is also offering higher-speed service for a fee. Sky digital customers can opt for an 8M-byte service with 40G bytes of usage for £5 (AUD$12.50) per month or a 16M-byte service with essentially unlimited usage for £10 per month.

Sky expects its network to reach 70 percent of the U.K. by the end of 2007. Customers who are out of the coverage area can subscribe to a more expensive service and later switch to one of the lower cost offerings if the network eventually reaches them.

Broadband customers will also receive a free wireless router and a year subscription to a McAfee Inc. antivirus service.

Carphone Warehouse Group started the free broadband trend in the U.K. in April, when it made the offering to subscribers of its telephone service.

"Carphone Warehouse caught the others by surprise and they've had to hastily put ideas together and launch counter attacks," said Michael Philpott, an Ovum analyst.

Just two months after launching the service, Carphone said it had been overwhelmed by the response. In late May, Orange PLC began offering free broadband to its U.K. mobile customers.

While the trend toward bundling multiple services together under one bill is happening globally, the marketing strategy of calling the broadband service free so far seems mostly limited to the U.K.

But Philpott expects the idea to catch on elsewhere. "Others are seeing what's happening in the U.K. and they'll pick up on the marketing success that Carphone has received," he said.

However, this cannot occur in Australia with pay TV provider Foxtel.

Under its agreement with Telstra, Foxtel is only allowed to offer entertainment services.

"They might be able to offer a Foxtel service over the BigPond broadband service but they can't run a broadband service themselves," said telco analyst Paul Budde.

"Telstra successfully avoids any competition. This of course is a real shame as we desperately need competition. So much for government policies that allowed Telstra to own Foxtel."

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