Sky adopts BT's no-frills broadband package

The long-anticipated move will see Sky offering BT's controversial 'no-frills' broadband package, BT Broadband, to its subscribers to compete with the 'all-in-one' phone, internet and TV offerings of its counterparts NTL and Telewest.

Announced with the satellite broadcaster's annual results this morning, the deal mirrors BT's discounted offering of Sky's services to its customers, but details are still sketchy. A spokesperson for Sky wouldn't elaborate on how it will be billed, priced or branded and - even though the company has demonstrated the service on a prototype, broadband-ready set-top box to analysts - whether the service will be accompanied by a commercial roll-out of such a device.

However, the company said the product would be available to its subscribers on "special terms", and would "ensure that Sky subscribers have access to a highly competitive offering as demand for broadband internet access develops."

The deal will come into effect with a commercial launch "later this year", supported by a "variety of marketing and advertising initiatives". Sky.com will also now feature among the websites on the BT Broadband portal, which points users towards the telco's content partners.

The no-frills broadband product, which doesn't include normal ISP services, has been seen as a significant threat as it undercuts the offerings of major players such as Freeserve and AOL, but is more expensive than those of some smaller providers with fewer marketing resources. The package, which has already been soft-launched by BT, will be targeted by the telco's Retail division at its vast base of phone users.

For Sky, it will also create more opportunities for interactive services and growth in average spending by its subscribers, an area in which it claimed success in today's full-year results announcement.

The company's figures for the twelve months to 30 June showed that the broadcaster generated a 100% increase in interactive revenues to £186m.

Of that figure, £95m came from betting services via interactive TV, the internet and telephone, while the majority of the rest came from the Sky Active platform and subsidy recovery revenues. Sky's bookmaker, Surrey Sports, now has 93,000 interactive TV betting registrations, it claims, and receives an average more than 60,000 bets per week.

The company's interactive ARPU (average revenue per user) for the quarter to 30 June came to £14, an increase of 29% on last year, while the company's total ARPU rose to £347 for the year.

Overall, Sky posted a net loss of £1.38bn for the year, compared with a deficit of £538.6m in 2001, thanks largely to a £971m write-off of its investment in a joint pay TV venture with German media group KirchMedia. It also reported a net profit of £1.7m for the quarterly period to 30 June, compared to a £165.6m loss in the same period last year.



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