BT looking at video on demand to beef up broadband

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The Independent Online

Bt Group is in talks with leading media groups about a video-on-demand internet service designed to increase the attractiveness of broadband.

Pierre Danon, the chief executive of BT Retail, said the company was also in discussions with the US media giant Time Warner, BBC, ITV and BSkyB about these groups supplying programmes for the new platform, to be called BT Rich Media. Taking advantage of new flexible bandwidth facilities unveiled yesterday, BT customers will be able to watch movies and television recordings at the click of a mouse.

Mr Danon also unveiled a new internet-based telephone service with Yahoo! which will allow BT customers to run their home communications from their PC and make phone or video calls over a high-speed internet connection.

The services are part of BT's new broadband internet business that was launched yesterday. Last week BT slashed the cost of its basic broadband service from £27 a month to £19.99 in response to a £15.99 service launched by rival Tiscali.

At the heart of BT's strategy is the idea of offering flexible bandwidth. Customers paying £19.99 a month are limited to downloading one gigabyte of data, roughly equal to 20,000 web pages or 600 short video clips, per month.

Flexible bandwidth will allow them to temporarily and instantly boost this download capacity and speed to allow them to buy DVD quality films or games online.

Mr Danon said: "We have said that for £19.99 you will get one gigabyte a month.... Now we are saying if you want more, you pay more. It is flexible. It is capacity on demand."

It is going to be a revolution that will help us manage a price war, or avoid a price war. People can pay for what they use. We are avoiding turning very high speed internet services into a niche market for people who can, say, afford £45 a month to have these higher speeds available all the time."

Tiscali yesterday reacted by promising its own flexible bandwidth services.

"We've already done this in France and we are looking at ways to implement it here. However, our focus is on encouraging mass market affordable products" a Tiscali spokeswoman said.