BSkyB set to trigger shake-up in ISP sector

BSkyB wants to be a standalone broadband provider

BSkyB’s plan to become a standalone broadband provider could signal the beginning of yet another shake-up in the UK internet services market.

The high-speed web access sector is already attracting competition from other types of communications and entertainment providers keen to ‘bundle’ broadband with their core services.

BSkyB already provides internet access alongside pay-TV, and has attracted more than 700,000 customers since it launched in July. But offering customers broadband only will bring it into competition with traditional providers such as BT, Tiscali and NTL:Telewest.

The move makes strategic sense for BSkyB, said Butler Group analyst Mark Blowers.

‘The business has already invested in the infrastructure for the bundled package, so there are no large set-up costs ­ it is simply about increasing market share,’ he said. ‘It is about capturing those customers not interested in Sky TV channels.’

The plan appears to be pulling in the opposite direction to the general trend for bundles.

More than 40 per cent of UK households have a package of more than one communication service, well above the 15 per cent European average, according to figures from analyst Ovum. But although bundled packages are pushing down prices, there will always be customers looking for a single service, said Blowers.

‘Pricing by newcomers such as BSkyB will have to be comparable to other standalone broadband providers,’ he said. ‘The good news for them is that there will always be a niche segment that just want broadband and are willing to pay for it.'