Sky hails broadband explosion

The BSkyB juggernaut's plough into broadband shows no sign of slowing, with the announcement today that it bagged more than 250,000 new punters in the last three months.

The new lines take Sky's broadband subscriber base to 716,000. BT and Virgin Media each has more than three million, which Sky reckons it will hit in 2010.

In the three months to June 30 it overtook Pipex and now ranks seventh in the UK. Most of Sky's ISP growth comes from existing TV customers. The overall net growth in subscribers was 90,000.

In the trading update today, Sky boss James Murdoch said: "Today we are adding new customers at the fastest rate since analogue switch-off; we are adding more broadband customers than any other provider; and we are the only major residential telephony provider growing its customer base."

Residential telephony was a particularly sore spot for bitter rival Virgin Media when it reported its last set of numbers in May.

Sky offers all its TV customers "free" broadband, mostly via the LLU network it inherited when it bought Easynet for £211m in 2005. It has now unbundled more than 1,150 exchanges and covers about 65 per cent of homes. Sky's "free" launch escaped much of the technical and customer buffoonery service that marred TalkTalk's entry.

Unbundling is key for making the "free" business model work, and it seems to be paying off for Sky: it also said it had boosted average revenue per user, the yardstick for telco success, by £21 to £412 annually (including TV revenues).

At time of writing Sky's shares were up more than 4 per cent. The trading update is here (.PDF).®