Consumer winner in broadband wars

High-speed internet access in Britain not only gets faster every month, it gets cheaper as well.

Companies ranging from Rupert Murdoch's British Sky Broadcasting to France Telecom SA are now letting surfers on to their networks for nothing at all.

Broadband is being given away in much the same way that credit-card lenders offer free pens, and fast-food chains hand out toys.

Even by the standards of high technology, broadband has made a rapid descent from being a premium, high-price luxury to a disposable commodity.

The companies have become obsessed with convergence - the coming together of telecommunications, the internet and entertainment - and believe customers want to buy them all from a single provider.

That is almost certainly a misjudgment.

No matter what highly paid management consultants might tell you, industries rarely converge.

In the short term, the broadband wars are great for consumers. In the medium term, they are likely to be disastrous for shareholders.

There are plenty of broadband offers out there. The word "free" is plastered over many of the advertisements, though if there is no such thing as a free lunch, as economists like to say, there should be no such thing as free broadband either.

Last week Sky waded into the market with all the subtlety that has made it the biggest player in Europe's pay-TV industry.

It is spending $1.2 billion to build its own broadband network. Subscribers to its pay-TV packages will get broadband access for nothing, though they will have to pay extra for unlimited and faster downloads.

Even with those caveats, it is still a very cheap offer - cheaper than the market expected, which is why the shares declined the day the deal was announced.

- BLOOMBERG