Bottom Line: A new front opens in the football wars

 
Marc Sidwell
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DING ding, seconds out. Another round in the ongoing fight between BT and BSkyB, and this time Sky is the one landing a hard punch. BT shares fell 2.8 per cent on the pay-TV firm’s offer to bundle unlimited broadband free for two years with its new European football channel.

The announcement took some shine off Sky as well, with its shares down 0.8 per cent. Yet on balance the aggressive broadband offer looks a smart one, given the group’s focus on getting users committed to its full suite of TV, broadband and phone services.
BSkyB’s latest results show 37 per cent of customers in triple-play, leaving room to improve. And with most of the firm’s average revenue per user (ARPU) coming from other sources than broadband, it won’t require too big a financial hit. With annualised ARPU at £571, and just £90-120 foregone in broadband fees depending on the offer taken up, this seems set to improve loyalty, reduce churn and hopefully lock more users in for the long term.

For BT, of course, it’s the opposite. The broadband deal opens a new front in a war that began over content. BT’s snatch of live broadcasting rights to the Champions League was an impressive blow to the incumbent. But Sky has hit back again, and from an unexpected direction. Free broadband may not be a sufficient answer for true football fans, but it shows the fight isn’t over yet.