BT, Microsoft unite to offer new subscription package

BT Group and Microsoft have announced a powerful alliance to sell broadband services bundled together with software applications for a monthly subscription of less than £50.

The service, to be called BT Connected & Complete, was launched in London by Pierre Danon, the chief executive of BT Retail, with a live video link to Steve Ballmer, the chief executive of Microsoft in the US. The two companies believe the initiative will provide a powerful combination aimed specifically at the small and medium-sized business market.

Customers will be able to buy a broadband internet connection with firewall and anti-virus software which is updated daily. They will get their own domain name as well as the tools to create a business website.

Microsoft will supply customers with its Hosted Exchange advanced e-mail software and its latest Microsoft Office Small Business software as part of the package. The deal includes twice-yearly health checks for a business's systems and access to a help desk. Local IT suppliers and contractors will be used to provide service back-up.

The combination of BT and Microsoft could prove controversial from a regulatory point of view. As the UK's dominant telecoms provider, BT linking up with the world's dominant software provider is likely to raise concerns among the former state monopoly's competitors.

But Duncan Ingram, the managing director of BT Openworld, the company's broadband division, rejected the idea that the development might prove controversial. "I don't see why. We are responding to what our customers are telling us they want. We are giving them access to some very, very good services," Mr Ingram said.

The new alliance will be backed by a £17m marketing and advertising campaign. BT believes demand for broadband access will grow rapidly among small and medium-sized enterprises as their customers and suppliers increasingly expect to deal with them using broadband connections. "We've been working on this since the late autumn," Mr Ingram said. "We approached Microsoft but they were already absolutely on the same page as us. Our thinking on this came together at exactly the same stage."

BT said the new service would allow business customers to buy both their broadband access and software needs from a "one-stop shop".