BSkyB makes stand on free broadband

James Murdoch plunges into online bloodbath

LONDON — BSkyB chief exec James Murdoch went to war Tuesday in the hypercompetitive U.K. broadband market by announcing a free basic broadband deal for the satcaster’s existing subscribers.

At a presentation in London, Murdoch, whose company faces fierce competition from newly merged cable combo NTL Telewest, plus British Telecom and mobile operator Orange, said customers could save up to £300 ($540) a year by taking Sky Broadband.

“A lot of the incumbent players are charging a lot of money for not a lot. I can see huge growth for us,” he said of the service, which bows next month.

Jon Florsheim, the managing director of BSkyB’s customer division, went further, saying, “The bloodbath is not going to be on our front lawn.”

BSkyB will offer the free service with download speeds of up to 2mb plus a one-off £40 ($72) connection fee. A Mid package costing $9 per month offers speeds of up to 8mb, while the Max costs $18 a month for up to 16mb, enough to download a movie in 10 minutes.

Sky will be the first U.K. outfit to give free wireless routers to customers, along with the option of professional home installation.

BSkyB is investing around $720 million in the service over the next three years and expects it to be profitable by 2010 at the latest.

Murdoch also announced the relaunch of telephony service Sky Talk, giving BSkyB the valuable triple play of TV, Internet and phone services.

Deals with Sony, Disney and Fox were in the bag for broadband rights, said Murdoch, and others were close to being signed.

He also revealed BSkyB is in the race to buy AOL U.K. — but not at any price.

BSkyB’s stock price fell from $9.91 to $9.47 following the presentation but rose to close at $9.80.

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