Magazine article Marketing

Media Analysis: Battle for Broadband

Magazine article Marketing

Media Analysis: Battle for Broadband

Article excerpt

Media firms have joined established suppliers in the fight for a piece of the triple-play market, writes Gareth Jones.

Convergence has become the boardroom buzzword, with media owners racing to roll out triple-play services spanning pay-TV, fixed-line telephony and broadband internet.

Last week, BSkyB hailed its fledging one-size-fits-all service a success, having signed up one in eight of its UK customers to its high-speed internet offering. Sky is claiming to be the country's fastest-growing broadband provider, attracting 716,000 new subscribers in the 12 months to June, taking its total to more than 1m.

The initial success of Sky's high-speed web service is a crucial step in its strategy to expand beyond its core pay-TV business and establish itself as a key player in the pounds 25bn entertainment and communications market. By providing a broader range of services, Sky will be able to attract more consumers and cross-promote its products 'We entered the broadband market because we saw a chance to challenge the established players and give customers something better,' says James Murdoch, chief executive of BSkyB.

News of Sky's 1m broadband customers has met with a positive reception from analysts. The UK is arguably the most competitive consumer broadband market in Western Europe, with internet service providers fighting hard for consumers not already tied into year-long contracts. However, churn is expected to rise to 30% by the end of the decade, providing media owners, including Sky and Virgin Media, with significant opportunities for growth. 'Platform owners can no longer afford to concentrate solely on their core markets,' explains Pete Nuthall, European telecoms analyst at Forrester Research. 'The land-grab is well and truly under way.'

The latest figures show that Virgin Media won 330,000 new broadband customers in the year to June. Carphone Warehouse signed up 701,000, while market leader BT swelled its numbers by 691,000. Tiscali trailed with 336,000 new broadband customers.

The influx of traditional media firms into the broadband market is good news for consumers. The size and scale of media owners such as Sky and Virgin Media is forcing prices down. Sky offers consumers a triple-play package for pounds 16 a month, compared with pounds 40 for a quad-play offering from Virgin Media that also includes a mobile contract. …

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