Sky's broadband debut set to spark price war

by Nicola Clark, Marketing 19-Jul-06

Sky is to launch a consumer broadband service backed by its biggest marketing spend this year as it seeks to shake up the market.

Details of Sky Broadband's offering have been fiercely guarded, but
insiders believe the focus will be on bundled entertainment
packages.

Of Sky's pay-TV subscribers, 47% already have broadband. The company

plans to target this audience aggressively with price promotions to

encourage them to switch provider to Sky.

The launch is expected to spark a fierce price war in an already
competitive marketplace. Analysts believe it could lead to a record low
in broadband pricing, as well as a flurry of short-term price promotions
and marketing.

NTL, which will rebrand its broadband services under the Virgin name in
2007, has already slashed its prices for broadband and TV packages. BT,
TalkTalk and Orange are expected to follow suit.

'We think people have been paying too high a price for broadband and, as
a well-known entertainment brand, we have something more to offer,' said
a Sky spokesman.

Sky's move into the sector follows its acquisition of broadband services
group Easynet for £211m in January. It is now expanding its
capability in a process known as 'local loop unbundling'.

Morgan Stanley predicts that Sky will have gained a 10% share of the
market by 2010, when broadband penetration in the UK is expected to have
reached 69%.