Cable operators Telewest Communications Plc and NTL Inc. have announced they are joining forces to sell high-speed Internet services in the UK at a price that undercuts British Telecommunications Plc.
NTL and Telewest, Britain's number one and two cable operators respectively, said they would join in marketing broadband Internet service from a price of as low as £25 a month for digital TV customers.
The two groups have borrowed heavily to build their cable networks as they bet on eventually selling telephone, Internet and pay TV services to customers. Offering a low Internet price would help them lay cable and gain access to more homes, where they could sell additional services to become more profitable.
Telewest, for one, plans to reach total monthly revenue per customer of 60-70 pounds and profitability within five years.
A comparable Internet product sold by BT costs around 40 pounds per month, the companies said. BT uses a different technology, which boosts transmission speed over regular phone lines, and recently told Reuters it was rethinking its Internet strategy because of flaws in the economics of the technology.
Between them, NTL and Telewest had just under 45,000 broadband Internet customers as of the end of March. NTL, with 26,300 of those, has set itself a target of 100,000 cable modem subscribers by the end of 2001.
Nine million British homes are ready to access broadband cable, and the two companies forecast 11.6 million homes would be able to use the technology by the end of 2002.