BSkyB Could Enter “Free” Broadband Battle

BSkyB could soon enter the “free” broadband battle arena after the company’s chairman, Rupert Murdoch, told investors in his News Corporation that the group would unveil its broadband strategy in the middle of July.

The full launch of BSkyB’s internet and voice-call service is expected soon after. The broadcaster is considering offering deals such as free internet access for its top tier subscribers, who pay more than £40 a month for its premium sports and film channels.

Carphone Warehouse and Orange recently launched “free” high-speed internet access on the condition that customers also acquire other services such as a fixed phone line or mobile phone deal (see Orange Announces “Free” Broadband TV).

However, Murdoch, whose News Corp controls 39% of the pay-TV broadcaster, added that the broadband launch would have a significant impact on BSkyB’s profits.

Analysts at UBS warned that the short-term losses incurred by BSkyB could be even bigger than expected if it aggressively undercut “free” broadband packages offered by Carphone Warehouse and Orange.

Analysts are expecting an initial loss of £70 million to £100 million on the service. However, UBS added that BSkyB’s voice calls and high-speed internet offering could undercut the price of close rivals such as NTL and BT by up to 60%.

BSkyB: 0207 705 3000 www.sky.com