Internet rivals kick up a fuss over BT's broadband plans

BT aims for £360m of revenue a year from its high speed net connection service

BT took the covers off its new "no frills" broadband product for the consumer market yesterday in a move designed to boost the take-up of high speed internet access in the UK.

While the move was broadly welcomed by the industry, it reignited the debate over whether BT was in danger of becoming a dominant force in the marketplace.

"If Oftel approves this stripped down broadband offering from BT Retail, then it would need to be strictly monitored by the regulator in order to protect consumers from the effects of abuse of dominant market position by BT," a spokesperson for the internet service provider Freeserve said. Thus, the telecoms company that owns the Demon ISP, said: "Healthy competition in the ISP market is vital for the long term interests of consumers, and this appears to be a direct threat to that."

BT's "BT Broadband" service will go on sale in the UK in September at a price of £27 a month, although users will have to pay a one-off connection fee of £60 as well as having to spend £80 on equipment.

Pierre Danon, chief executive of BT Retail, said he believed the new "no frills" product would help the company achieve its target of signing up 1 million broadband internet customers by the summer of next year.

He brushed aside fears the new BT Broadband service would fail to win approval from the regulator, saying he had spoken with Oftel "in depth" about the new service, noting: "At this stage, so far so good."

While analysts were wary of regulatory intervention, they believed the product was likely to gain approval, mainly because broadband has been slow to take off in the UK. "If they [BT] play it strictly by the rules, the regulator is not likely to cause them any problems," said one analyst who did not want to be named.

In addition, BT unveiled a new internet service that will enable consumers to pay for content and services online as they use them, avoiding monthly subscription charges. That service, which uses technology from the German company Firstgate Internet, would enable users to buy games or content like news articles that cost relatively small sums on a single account.

BT also said it planned to launch a "Digital Support Service" in the autumn through which it would provide consumers with computer kit, install the technology and then maintain it in the future.

Mr Danon predicted the new services would add an extra £580m of gross revenue in the 2004/05 financial year with the bulk of that, or about £360m, from BT Broadband.

"These moves are all about providing our customers with the services they have told us they want – faster direct access to the internet, integrated sales and service and real choice of compelling content and online services," he said.

The announcement comes less than a week after Freeserve signed a deal with the retailers Dixons, PC World, Currys and The Link, to get its "Broadband in a Box" service sold on the high street.

AOL, a rival ISP, said yesterday that while it had held discussions with BT about the UK telecoms giant's plans, it proposed to launch its own product in the "near future".

BT, which recently sketched out its new group strategy, said it is targeting having 2 million broadband users by 2004 and about 5 million by 2006.