The Post Office has announced that it will be launching a new broadband service later this year, after agreeing a deal with BT Wholesale.
Under the £750 million four year deal, BT Wholesale will provide the Post Office with an integrated range of telephony and broadband services. It is expected that the Post Office will be able to provide customers with high speed internet connections by the autumn, and will go head to head with the industry's largest ISPs (internet service providers).
As the Post Office continues to experience a decline in the revenue generated from its branches, the new agreement is one of a number of new initiatives the company is taking to reinvent itself. It has already increased its catalogue of services to include car and home insurance, savings accounts, credit cards and personal loans.
The internet has been much to blame for the downturn in business at local Post Office branches as more customers choose to operate online, and over the last two years it has lost 4 million branch customers. However, the company is now hoping to harness the power of the net to reverse the recent decline.
"We're delighted to have BT as a partner in a deal that gives a tremendous boost to the Post Office's determination to be one of the leading players in the telecoms market," said Alan Cook, managing director of the Post Office. "The agreement provides the platform to enhance the Post Office's existing HomePhone service while offering customers some of the best deals in the market for both voice and internet broadband services."
He continued by saying that the new deal provided the Post Office with the opportunity to provide broadband customers with a trusted and reliable service at the lowest possible cost: "We're convinced there is a real demand in the telephony and broadband markets for a value-for-money service from a trusted provider and this deal puts the Post Office in a very strong position to compete. The real winners will be the customers."
Meanwhile, Paul Reynolds, chief executive of BT Wholesale, commented: "This is a landmark agreement between two of the UK's leading and best established businesses. It will help to quickly establish the Post Office as a key player in an exciting, dynamic and ultra competitive market for broadband-based services."
Industry reaction
Although the number of customers switching to broadband in the UK is continuing to rise, some experts have warned that the Post Office will not find it easy to establish a stable footing in the market.
Mark Blowers, a senior research analyst at Butler Group told Computing UK: "It is a very competitive market and the Post Office may have missed the boat by not getting into that market a couple of years ago."
The Post Office will be restricted as to how much they can reduce prices by the fact that they are reselling BT Wholesale provided broadband. ISPs such as TalkTalk and Orange are already providing free broadband with their voice deals, while the larger players such as Sky and Virgin can offer bundle deals that include TV channels and telephone services.
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