BT launches VoIP - targets cable rivals

10 Dec 2003

UK incumbent BT Group is to launch a major foray into the consumer market for cheap voice-over-IP (VoIP) telephony services, throwing down the gauntlet to cable rivals NTL and Telewest by offering their customers discounted voice calls. In what is being hailed as the first such initiative to be launched by a major telecoms player outside of Asia, BT plans to provide customers with a broadband VoIP ethernet router adaptor – at a cost of GBP60, but free until 31 March 2004 – enabling them to access its network without having to reconnect their line to BT via the PSTN. Users will be charged a rental fee of GBP7.50 per month, allowing them to make free calls in the UK at evenings and weekends, while daytime calls will be levied at GBP0.03 per minute, with a GBP0.05 minimum charge. The incumbent says consumers using the service could save up to 57% on calls to mobiles and 25% on daytime calls. Turning up the wick in an already competitive market, the new product, called Broadband Voice, is initially being targeted in areas where rivals NTL and Telewest have an active presence in the cable modem market. BT is gambling that the service will help it hit back at the cable operators which have diluted its market share – down to 80.5% in March this year – and help it offset the decline in its traditional core fixed line business. However, NTL and Telewest were quick to dismiss BT’s new offering. The former questioned BT’s calculations, saying Broadband Voice would in reality only save customers GBP0.50 per month, while Telewest Broadband’s director of telephony, Matthew Deardon, said that BT’s hyped VoIP product had its ‘limitations’ and would not trouble Telewest’s broadband subscribers in the long run.

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