Following its announcement earlier this month that broadband subscriptions are up to one million, the telco has now stated its plan to grow this number to five million by 2006. But attracting customers to spend almost £30 a month for broadband has not proved easy.
BT Retail boss Pierre Danon said that the company won't be attracting these customers by "hammering home the fact that [broadband] is fast" because the average internet user — as opposed to a heavy user who is probably already spending close to £30 on a dialup connection — simply "doesn't care about how fast it is", claims Danon.
Lowering the cost of broadband is another option, but Danon doesn't see this as the right route either, as to keep the company in profit it must charge a decent amount for its broadband services. He said there is no chance of consumers seeing radical cost cuts that would make prices fall as low as £20.
Instead, BT thinks the magic recipe is value for money in the shape of unique broadband content. Enter Yahoo, one of the world's largest internet content providers. The companies are pairing up to create a portal that combines all the extras customers have come to expect from paid-for access services such as AOL.
It offers many of the features already touted by its rival, such as spam filter, parental controls, instant messenger, logon addresses for all the family (offering 10 to AOL's eight). It has also added a few extras, such as a free firewall, off-portal parental controls, and personalisation of the desktop, bolted on to distinguish it from its slightly cheaper rival.
Yahoo hopes that these additions will be enough to tempt people to opt for the £29.99 a month BT Yahoo Broadband offering over the £27.99 AOL Broadband service. BT says its service can't quite match AOL's since the US-based ISP currently doesn't pay VAT in the UK.
To ensure that the investment in BT Yahoo Broadband, which Danon says runs into "millions, rather than tens of millions", reaps rewards. Yahoo and BT plan to share their customer bases with each other, and Yahoo will push the service to the approximately 15 million users who visit its pages each month. Yahoo will get a payment for each user it signs up, while BT will cut its costs by handing over the development of the consumer BT Openworld portal to Yahoo. This means Yahoo takes over content development, while BT concentrates on provision of the service in terms of access and customer support.
The agreement will allow "both [Yahoo and BT] to focus on what they do best", explains BT Openworld boss, Duncan Ingram.
The service, which is due to be rolled out to new signups in September or October this year, will then be extended to existing customers. Ultimately BT hopes to offer something similar to its narrowband customers, but Danon says that for now the focus is on broadband. BT has set itself the relatively restrained goal of finding 60,000 new customers between launch and March 2004, and will be backing the launch with on- and offline advertising campaigns.
BT will continue to offer its BT Broadband no-frills service alongside BT Yahoo Broadband which will take over from the BT Openworld brand for consumers.