Post Office to enter broadband market

The Post Office is helping to fill some gaps in cash access (Rui Vieira/PA) (PA Archive)

The Post Office has set itself ambitious growth targets in the broadband sector as it looks to tap into the growing "silver surfer" market and appeal to subscribers who want to pay for a high-speed internet connection with cash.

The company aims to sign up more than one million broadband customers by 2010, despite its relatively late entry into the market. It hopes to sign up 600,000 users over the next six months and has set aside a £9m promotional budget. The service will launch next week with the boy band Westlife appearing in its advertisements.

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The Post Office will use its 14,000 branches to make its mark in the sector and will initially target its 400,000 telephony customers, a large number of whom have expressed interest in sourcing more communications products from the Post Office. The company has already signed up 1,000 broadband customers after a month-long trial in 124 stores. It is targeting late broadband adopters, as well as customers who are fed up with other suppliers, most notably Carphone Warehouse. At £15.95 a month, Post Office broadband will not be the cheapest but there will be no "rural surcharges" – fees which vary according to where a user is based. BT will provide the Post Office network.

The Post Office believes its target broadband market – the over-50s, who already account for about 25 per cent of internet users, and people who want to pay in cash – is worth nearly £500m. It claims to have identified six million families which have yet to sign up for high-speed access.

However, Steve Weller, of price comparison website uSwitch, said: "The Post Office's target will be hard to meet. Only TalkTalk managed to reach such a high number of customers in a short period of time but that was by offering a 'free' product.

"With so many other established broadband players, it will be interesting to see how the Post Office fares in reaching its goal."