By Martin Lynch: Wednesday 19 July 2006, 14:13
YESTERDAY, Sky launched itself into the free broadband market with the same kind of impact that Pavarotti would have jumping into a kids paddling pool. Now, the arrival of another ‘free’ broadband supplier is not new. In fact, they’re like flies in summer: very common and very annoying but with the upside that they will nearly all be dead by Christmas.
Most free broadband services start like most failed relationships: looked like a good deal, full of promise that quickly turns sour, thanks to poor servicing and support and there’s no way out without enduring a significant amount of emotional or financial hardship. At least with broadband, you get to keep the dog.
Sky’s entry though was a lot bigger and more aggressive that the market watchers had expected. In fact, I think that’s one of the key reasons it will succeed in becoming a major player in a relatively short space of time.
Ever since it bought out ISP Easynet, it was on the cards that Sky would launch a broadband service. It was also no surprise that it would try and capitalise on its existing TV viewers. After all, if mobile phone suppliers can do it….
What no one really saw coming though was the scale of the operation. After all, it’s not every new broadband supplier that offers free 2MB broadband to eight million TV subscribers. That’s right, unlike most of Sky special offers, you don’t already have to subscribe to Digital TV or Sky Sports 1-to-452 etc. Etc. etc. Any TV subscriber can avail of the offer. First though, let’s clear up the free bit: apart from the £40 connection fee, the 2MB broadband is free. Always a catch – but not the worst. If you opt for the £5 per month 8MB service, the connection fee falls to £20 and if you really want to beef up that porn collection, you can opt for the 16MB unlimited broadband for a very low £10 per month, and connection is free.
So, free broadband for most Sky TV subscribers will cost something after all, but it seems like a small price to pay. £40 for 2MB with limited downloads for a year is not bad. BT and NTL charge around £18 per month upwards for their basic offerings, which is not cheap, even with no connection fee.
However, to concentrate on the pros on cons of various service contracts is to miss the big picture and I run the risk of you all killing yourselves. Sky is throwing £650 million at this over the next two years. There’s £250 million up front with another £400 ear-marked for expansion. This is much higher than anyone thought. So much so that the share price dropped by over 4 per cent on the news, as nervous shareholders collapsed in a faint, and not because of the heat wave. Sky ‘guestimates’ that 2.4m of its 8m customers will opt for its broadband and that by 2010 it will be profitable. Assuming that some of them are tied into 12-month contracts with other broadband suppliers, it might be next year before the real take-up starts.
Sky really had no choice but to get into this market. BT is planning to get into TV via broadband, as are many others so it makes sense that Sky is building the barricades now by offering broadband to its TV customers. After all, Sky has its own problems. It loses 800,000 TV customers a year but broadband could help cut that number as Sky offers more services. Free broadband is a good place to start. And don’t forget what’s coming next. Downloadable movies are on the horizon and Sky is making damn sure it’s not left on the platform when that gravy train pulls out. It has no intention of losing TV share and download revenues to some broadband TV upstarts.
Rhino wrote:Just heard and it looks to shake up the broadband debate.
BASE up to 2mb and 2gb download, £40 activation fee and free per month
MID up to 8mb and 40gb download, £20 activation fee and £5 per month
MAX up to 16mb and unlimited download, free activation and £10 per month
Totally blows any deal out there !!!
nope - don't understand
Rhino talking on ambo999Rhino wrote:Zippy's right..... I know what youre all thinking You will have to sign a 12 month contract if youre a new customer and maybe again if you an existing customer. I think the sky, broadband & phone will be all in one just like NTL eventually.
Sky already offer phone & tv so it completes it with broadband.
Just tried looking into the T&C of it and everyone must be looking in for a freebie cause you cant get in
anybody else know what's going on? my head is about to blow a fuse