‘Zero conflict’ in BT over broadband

All about choice

The head of BT Retail, Pierre Danon, today dismissed reports that the introduction of a "no frills" broadband service would lead to internal conflict within BT.

A newspaper report at the weekend claimed that BT faced "civil war" because the introduction of the access-only product, BT Broadband, was in conflict with the telco's mass-market ISP BTopenworld.

The report even suggested that BTo would have to rethink its strategy and even think the unthinkable and consider ditching consumer-focused broadband services.

However, speaking to The Register Mr Danon said: "There is zero conflict. We shall push both options [BT Broadband and a full ISP service from BTopenworld] and give a choice to customers."

Normally, greater choice for consumers is something that is to be encouraged. However, analysts at J P Morgan were less than enamoured with BT Retail's £27-a-month stripped down service.

They felt that BT's discounted pricing - just £3 a month cheaper than a full ISP service from BTo or Freeserve - was "not compelling enough to compensate for the lack of email and services included in its offer".

Their conclusion was that the threat of BT Broadband had been "overdone".

Mr Danon remains philosophical about such criticism of something that is a major plank of BT's strategy and points instead to research by Ovum, which acknowledges that by clearly separating the provision of content and broadband access BT has created a "whole new proposition for Internet access".

Neither does Ovum believe that BT Broadband will wipe out the need for ISPs. Instead, it predicts that service providers will have to redesign their service offering and revenue streams to move towards providing content and more sophisticated services.

Of course, whether this happens or not remains to be seen. But what of those ISPs providing full services and still undercutting BT Broadband?

Yesterday, the MD of Pipex, David Rickards launched a scathing attack on BT and other broadband providers claiming that if consumers are paying more than £25 a month for DSL then they're being overcharged.

Said Mr Rickards: "The BT Retail 'no frills' Broadband access only services due to be released late autumn have certainly not been priced to match their "no frills" service.

"At £27 inc VAT per month, this limited Broadband service has been ridiculously overpriced and I believe they know it. Do they really believe the British public are so naive?

"In my opinion, this is blatant liberty-taking of their dominant and unfair market position," he said.

Today, Mr Danon hit back claiming that the numbers simply didn't stack up. He believes that such low prices are not commercially viable or sustainable. Mr Rickards disagrees and maintains he can make a profit.

While the row will no doubt continue, on the issue of price, the head of BT's consumer division said it was likely that that over the next two or three years the price of broadband would come down. ®

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