TriBand by BSkyB and Mobile Data "Uncomfortable"

BSkyB Shares Decline on Plan to Invest $729 Million

July 18 (Bloomberg)

BSkyB, chaired by Rupert Murdoch, plans to begin offering customers phone and Internet services next month, the Isleworth, England-based company said today in a statement. It will offer a basic broadband service as part of its Sky TV service for no additional monthly charge.

``The market has clearly been taken aback by the scale of BSkyB's ambition,'' Lorna Tilbian, an analyst at Numis Securities Ltd. in London, said in an e-mailed research note. The investment amount ``compared with many estimates of around half of this level,'' she said.

BSkyB's service will compete with the combined Internet, phone and TV offerings from companies including NTL Inc., the U.K.'s biggest cable-TV carrier, and BT Group Plc, the former phone monopoly. BSkyB has more than 8 million pay-TV customers.

Attractive Strategy

``In our view the strategy is attractive, and although we expect the broadband market to be very competitive going forward, we believe that BSkyB should be able to carve out a substantial, and very profitable, position,'' Tilbian wrote.

Price Plans

BSkyB will offer broadband service at three speeds, 2 megabits, 8 megabits and 16 megabits. The slowest service, to be called Sky Broadband Base, will be included with Sky's monthly TV service. The Broadband Mid package will cost 5 pounds a month for Sky TV customers, and Broadband Max will cost 10 pounds. All three will include a free wireless connection box.

The services are available in areas covered by BSkyB's broadband network, which currently encompasses 28 percent of U.K. households, the company said. BSkyB plans to be able to reach 70 percent of homes by the end of 2007.

The company also said customers can have unlimited landline calls in the U.K. for 5 pounds a month under the Sky Talk service.

The combined services will also compete with broadband and fixed-line phone packages sold by mobile-phone retailer Carphone Warehouse Group Plc under the TalkTalk brand.

`Uncomfortable'

BSkyB's CEO said the company's mobile strategy is focused on mobile content and new distribution streams for its content.

``We are not that interested in being a mobile network operator at this point,'' James Murdoch said ``It's an uncomfortable marriage between mobile and broadband. We think that's uncomfortable for customers and they won't get it.''

BSkyB's approach to mobile and broadband differs from that of NTL and France Telecom SA. NTL agreed to buy Virgin Mobile for 962 million pounds in April to add wireless phones to its television and Internet services.

France Telecom, Europe's second-largest telephone company, said in May that it will start offering Internet, television and business services under the Orange brand. France Telecom chose to unite its services under the Orange banner to capitalize on the brand's customer base, it said then.

The new Orange brand will also introduce a number of advanced services including high-definition television via Internet in France and free broadband for U.K. customers signing up for a new cellular-phone contract, the company said in May.

(c) Bloomberg