BSkyB launches broadband Internet access service

British pay-TV company BSkyB has launched a broadband Internet access service that it will bundle with its satellite TV offering, taking on competitors including telecommunications giant BT Group.

The company, 38 percent owned by Rupert Murdoch’s media conglomerate News Corp, said it anticipated investment of £400 million ($728 million) of earnings before interest and tax over the next three years in the service. BSkyB also said it expected the service to enhance earnings from 2010.

Sky will offer its customers free broadband with up to 2 megabits per second download speed whatever TV package they take and will throw in a free wireless router which allows users to connect to the Internet anywhere in their house without the need for a network of wires.

”The business case is clear,” Chief Executive James Murdoch said in a statement. ”We believe our investment will enhance top-line growth, be earnings enhancing from 2010 and with the benefits of scale, deliver increasingly attractive returns thereafter whilst offering substantial savings and compelling value to customers.”

BSkyB’s shares fell 2.7 percent following the news. Some analysts have warned that the company will face expensive outlays in the first several years of its broadband service, due in part to the cost of installing its own equipment in BT’s telephone exchanges to gain direct access to homes and businesses, known as local loop unbundling.

Sky’s broadband package, which follows its acquisition of Internet service provider Easynet last year, comes as media and telecommunications firms invade each other’s territories and bundle multiple services to woo consumers and stop them from going elsewhere.

Source: Media Network, Reuters

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