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BT Broadband not a threat to Freeserve
But doth the ISP protest too much?

By Heather McLean

Published: Friday 26 April 2002

Freeserve is not feeling threatened by BT Retail's 'no frills' broadband offering due out this autumn because the product is overpriced, according to JP Morgan stockbrokers.

Annelie Powell, equity analyst at JP Morgan said Freeserve will still achieve 18 per cent market share of the UK broadband industry by 2006, as originally predicted.

In a statement, Powell wrote: "Freeserve currently holds around 25 per cent of the narrowband market. We assumed the broadband market would be more intense and competitive so we expected Freeserve to get 18 per cent of the market.

"We do not believe BT's discounted pricing is compelling enough to compensate for the lack of email and services included in its offer price."

She also noted that Freeserve's distribution agreement with high street company, Dixons will be a useful marketing tool and that users who are either already tied to an ISP or not yet on the net will not find the BT package attractive.

However, a telecoms equity analyst at a rival bank disagreed that BT Retail's product would not appeal to users.

He said: "According to BT's research, 60 per cent of ISP users change the homepage set by the ISP. I use Hotmail for my email. An ISP package makes very little difference."

However, he added: "I agree with JP Morgan that BT's pricing is not particularly compelling."