Sky unveils long term plan for providing broadband for Britain

Plans top move existing subscribers over to broadband while undercutting BT and NTL

Sky is planning on signing up 3 million of its British customers to a new broadband service by 2010, and will spend 400 million to do it.

Sky's chief executive James Murdock announced the plans to offer a 'free' broadband service on the same lines as Orange and Carphone Warehouse. Customers will ber able to get 2MB broadband free (excluding a 40 installation charge, as well as an 8MB service for 5 per month and an unlimited 16MB service for 10.

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"The business case is clear; 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," said Murdock

"This is a transformational new initiative for Sky."

The company says it can reach over a third of UK homes at the moment and this will rise to 70 per cent by next Christmas. In the meantime Sky will have to buy space on existing networks.

"It's a competitive market, and we welcome Sky's late arrival to the party," said John Petter, chief operating officer of BT Retail.

"Today Sky reaches only 28 per cent of UK households and has very limited coverage in Scotland and no coverage in Wales and Northern Ireland. Therefore, only a small proportion of UK customers can take advantage of Sky's service right now. BT's broadband coverage is 99.8 per cent."

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