BSkyB Launches Broadband Internet Access

After spending $373m (£211m) on broadband internet provider Easynet, BSkyB will announce its new broadband product in the UK on Tuesday morning.

BskyB, which is 38% owned by Rupert Murdoch’s News Corp empire (as is Fox Network), will announce a new – revamped – service tomorrow which is thought to offer both high speed and additional services through its rich media portfolio.

With a growing number of broadcasters providing online broadband access to media, it is thought that BSkyB will offer more than just simple broadband access, and fold out a package of products to subscribers, including telephone services. Eventually even potentially offering video through wire for the first time as an alternative to satellite.

But key to the launch will be how the bundle will be packaged and priced. With the UK already experiencing a land grab in terms of broadband customers, many broadband services are being offered as ‘free’ – part of another service but with no additional cost. By June this year broadband connections in the UK where at 8.1m, nearly double the previous year.

BSkyB have already warned that the new Broadband package will hit its bottom line, but it needs to invest in order to stay in the game in the new media market place. 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. With losses estimated to be between $128m and $184m (£70-£100m) on roll out.

Prices in the market could become even lower for the consumers as competition heats up. The only other major contender in the market is BT, which is still held back until early next year due to regulatory issues – though BT is expected to compete aggressively as soon as it can.

The UK was once a laggard in the internet market place, though it still has a long way to go to catch up with South Korea and Sweden, where fibre optic cables into the home offer speeds of  up to 125 times faster than the fastest 8Mb connection available to UK users.