NTL offer could lead to price war over cable packages

Cable company NTL introduced a television, dial-up Internet and telephony package yesterday which it claims could save consumers up to £35 per month compared to similar services offered by competing operators.

The basic package of services costs £20 for consumers in areas where NTL has upgraded its cable network. This includes two telephone lines, cable TV and unlimited access and usage of the Internet. But at present only a handful of customers will be able to avail of this package.

Separately, the company has also introduced a cable modem Internet service which offers connection speeds of 512 Kps, up to nine times faster than dial-up Internet. This "always on" Internet service will cost consumers £50 per month.

NTL aims to achieve 40 per cent penetration in the telephony and Internet markets within 18 months of upgrading in an area. At present just 8,000 customers will be able to sign up for the £20 bundled service as NTL has only completed its cable upgrade in Tallaght, Dublin.

NTL's managing director, Mr Ian Jeffers, said the company had initially hoped to upgrade some 10,000 homes per month but had reduced this to 8,000 "so we know we can look after customers".

The company is currently upgrading areas in Clondalkin and Coolock and will begin the same process in Waterford and Galway early in the new year. The full NTL network will be upgraded within three years at a cost of more than £300 million (€381 million).

Cable customers whose area has not been upgraded will be offered a £15 per month bundle of services which includes cable TV, dial-up Internet (unlimited access to the Internet is available only at the weekends) and telephony through carrier pre-select technology called CPS.

Carrier pre-select enables NTL to offer a telephone service, although Eircom will maintain control of the telephone line and therefore customers will have to pay line rental of £13.21 to Eircom in addition to NTL's £15 charge.

Customers living outside the NTL franchise areas of Dublin, Galway, and Waterford will be offered carrier pre-select telephony and a dial-up Internet service.

However, Mr Jeffers said the company was considering opportunities in mobile telephony and accessing the last mile of Eircom's telephone network to extend its reach into other areas of the Republic.

The launch of NTL's bundle of services could begin a price war in the Republic and is likely to provide the first major threat to Eircom's residential telephony customer base.

Competing telecoms operators have tended to focus on the lucrative business market until now. A recent survey from the telecoms regulator shows Eircom still controls almost 90 per cent of the residential market and call charges here remain higher than in most other OECD countries.

Mr Jeffers does not expect a major price war but he believes "reality" will enter the market with prices only going one way.

He said NTL would not seek to be the cheapest operator, but would market its package as a bundle of services. The minimum NTL call charge will be 3.5 p with a single national call rate of 6 p daytime covering Ireland and the UK.

Mr Jeffers said the company would present its digital television service later this year and had plans to roll out interactive TV and video on demand sometime next year.