Jane Lighting On Broadcasting

BSkyB's web feat sets stage for bloody battle of broadband giants
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The Independent Online

That and the announcement of the setting up of Sky Broadband demonstrated that BSkyB is now ready to move its tanks on to the lawns of internet service providers, cable companies and BT.

Easynet, a broadband network owner and operator in the UK, with operations in nine other countries, has its own equipment in 250 BT exchanges and plans a further 100 next year, giving BSkyB a potential reach of up to 5.8 million homes.

It opens up a new area of potential business for BSkyB with 8 million broadband subscribers in the UK and the 7 million still using narrowband upgrading at a rate of 75,000 a week.

Actions speak louder than words and this acquisition looks like an admission by BSkyB that its TV platform alone is not enough to sustain growth in the new digital world.

As the figures BSkyB announced on Friday revealed, though profits remain robust and it remains on target to hit 8 million subscribers by the end of the year, the rate of increase in new subscribers is slowing.

BSkyB has had to recognise that despite a massive marketing campaign, new subscribers are down from 62,000 for July to September in 2004 to 57,000 for the same period this year.

Buying Easynet gives BSkyB a new avenue of attack as it strives to hit its aim of 10 million subscribers by 2010. Sky could move the goal posts and define "subscribers" as customers who buy internet services, even if they do not subscribe to any TV packages to meet the target.

Sky will now be able to offer its TV services via broadband to those who refuse to have a dish on the side of their house or to the 2 million homes that cannot get reception via satellite.

Equally, those homes that have embraced Sky will no doubt be bombarded with glossy literature encouraging them to add internet services to their package, fulfilling Sky's other aim of increasing ARPU (annualised revenue per user).

This is surely a bold move for Sky with nothing but upside? BSkyB can't expect to have it all its own way and the move into "triple play" puts it into even more direct competition with the soon-to-be-merged, and therefore more threatening, cable business of Telewest and NTL.

NTL's chief executive, Simon Duffy, last week questioned whether BSkyB has the experience and knowledge to operate in these new areas and warned of potential "culture clashes".

From my past experience as chief executive of Flextech (part of Telewest), I know that when you start to offer more services it not only impacts upon the clarity of proposition and pricing you offer the customer, but also adds a serious level of complexity to your business model.

Easynet may have the network and BSkyB the money and know-how in marketing and brand-building, but marrying these will be a tough challenge.

Despite the difficulties, moving into "triple play" ticks all kinds of boxes for BSkyB as its share price stalls and, interestingly, acknowledges that broadband is going to be as big a part of our digital futures as satellite, cable TV and Freeview.

BT and the newly invigorated cable industry are unlikely to take this lying down. A bloody turf war looks set for the months and years ahead.

Hopefully, it will be a war in which the customer will reap the benefits of attractive offers and pricing as the big beasts battle it out.

A day to Berry bad news

The consternation at the BBC caused by malfunctioning BlackBerries highlighted the two main downfalls of technology: our helplessness when it goes wrong, and its potential to embarrass us.

Gadgets soon become essential tools, without which you can't function. But such reliance brings risks, as shown by the Beeb's BlackBerry blip when Peter Fincham's personal views on Cilla Black reached a wider than intended audience.

No doubt having to go cold turkey had the execs twitching. But this increasing reliance means that, rather than liberating us, we become slaves to technology and unable to perform the ordinary everyday functions we used to carry out perfectly well on our own.

Last week, I had a few sharp reminders of what it's like when good technology goes bad, all within a few hours. First, my desktop froze, and when my PA tried to update my diary, the appointments melted away into cyberspace. Then, in solidarity with its BBC brothers, my BlackBerry gave up the ghost. Finally, the electronic key to my garage decided not to work as the heavens opened. As I stood in the rain, I realised that the only piece of technology I didn't have was an umbrella.

Jane Lighting is chief executive of Five