ISPs go mad in broadband price riot

 

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Posted on 4 Oct 2002 at 16:00

Freeserve bundle in broadband land while Tiscali tickles the sub-twenty-pound surfers

Freeserve and PC World have teamed up to offer cheap broandband, for a bit. Customers buying an emachine computer from PC World, can tap into a special deal from Freeserve, bundling in the modem and microfilter for free and giving them broadband access for £19.99 a month for half a year, and £29.99 inc VAT thereafter.

The Freeserve broadband package is the same as the self-install £84.99 boxed product you can already buy in PC world, the only difference being that you don't have to pay for the hardware. You also don't have to pay the £65 activation fee - in all leaving you better off to the tune of nearly £150.

The cheapest emachines start at around the £800 mark, and the Freeserve deal comes with a minimum one year contract.

The offer should help both companies cash in on the Christmas PC sales, although it is due to run out on 22 October, but Freeserve told us 'This is the initial trial period of the offer and there will be further details to follow'.

Freeserve is also extending its 'free connection' offer for its standalone product until the end of the year: you get the set-up fee waived but pay the standard £29.99 rate.

Separately, Tiscali has also announced a permanent £19.99 deal for a broadband package, although the bandwidth is choked to 256Kbits/sec downstream - half that of the standard 512Kbits/sec offered by the likes of Freeserve and BT. On top of this is a £50 set up fee and the cost of the hardware - another £65. However, you don't have to buy a PC with it.

Steve Horley, ISP Director for Tiscali told us that far from entering a financially negative price war, Tiscali's new broadband deal would 'make a positive margin' for the ISP. The reason for this, he says, is because of an Oftel ruling this summer that effectively means the company can take control of its Internet traffic much further up the chain, rather than having to pay BT to manage it right up until the last mile.

He stressed that Tiscali was in a good position to move quickly on the summer 'ATM interconnection' ruling as it has a very long lease on the fibre network it uses to carry its traffic, which meant it could negotiate directly with BT, rather than by proxy through the network owners.

As to what difference customers would see on a 256Kbits/sec connection as opposed to a 512Kbits/sec one, he reckons for general surfing you would have more than adequate bandwidth, and cites the success of NTL's 128Kbits/sec service as evidence of the appetite for 'middle-ground' broadband services. Even so, media-hungry types might prefer the full 512 option for streaming large files.

Whether Tiscali would make downward moves on its 512Kbits/sec service, Horley declined to comment, saying the company has no new plans for this at the moment. Tiscali's 512Kbits/sec service costs £27.99 (although no activation fee applies).

Author: Matt Whipp