AOL challenges BT's 'no-frills' broadband

AOL intensified the level of competition in the UK's broadband market today by launching a broadband package for £27.99 per month.

This price point puts AOL's new broadband offering almost in line with BT's "no-frills" package, called BT Broadband. Unlike BT Broadband, the AOL package will also include features such as email and instant messenger, as well as broadband content.

AOL UK chief executive Karen Thomson said that offering a broadband product at £27.99 meant potential broadband consumers could concentrate on choosing a package based on service, rather than price.

"We've been tracking the trends in the broadband market, so we know that customer awareness of broadband is rising. We think this is the right time to launch a new product that takes price out of the equation for consumers," Thomson explained.

BT Broadband, the "no-frills" product offered by BT Retail, only provides a basic high-speed connection. It costs £27 per month if paid for by direct debit or on a monthly payment plan, or £28 per month otherwise.

AOL Broadband, Thomson said, offers much more than just connectivity.

"This is a really compelling consumer package, including a variety of features such as email, instant messenger and innovative broadband content," Thomson said.

This broadband content includes film previews, cartoons, and news and sports footage.

At £27.99 a month, AOL Broadband is £2 per month cheaper than broadband from Freeserve and BTopenworld, but several pounds a month more expensive than offerings from smaller ISPs such as Pipex and Plusnet.

BT has only just finished a £10m broadband awareness advertising campaign, which has been followed by a second major campaign for BT Broadband.

"It's very important that BT are spending money to build the broadband market, but I'm determined that they will have competition in that market," said Thomson, who explained that AOL is planning adverts that will specifically push its broadband offering, as well as integrating it into its normal advertising activity.

"BT's advertising will help to grow the market, and that helps everyone," Thomson added.

Back in June, AOL launched a broadband package costing £34.99 per month, which some in the industry claimed was simply too expensive to appeal to consumers.

Thomson declined to say how many broadband users AOL has already, but insisted that this earlier broadband product was designed more for early adopters as it included features such as access to AOL's flat-rate dial-up network when a user was away from their home PC.

In a separate development, the government has confirmed that there are now one million broadband customers in the UK.

Graeme Wearden writes for ZDNet UK