February 12, 2003 6:16 AM PST

Yahoo extends broadband reach to Britain

Yahoo is going international with its broadband efforts, signing a deal with BT Broadband to offer high-speed Internet service in the United Kingdom.

The new service, dubbed Yahoo UK Plus, will include multiple e-mail accounts, instant messaging, digital photo storage, firewall security and antivirus software. The companies did not say when the service would be available or how much it would cost. DSL (digital subscriber line) service from BT Broadband costs $43.70 (27 pounds) per month.

High-speed access and other premium services are a key part of Yahoo's evolving strategy, aimed at shoring up the Web portal's bottom line. In the third quarter, the company's fees and listing business rose 120 percent to $89.4 million. About 70 percent of that business comes from premium services including personals, e-mail forwarding, e-mail storage and Internet access.

For Yahoo, the agreement coincides with the company's Wednesday presentation to Wall Street analysts at its Sunnyvale, Calif. headquarters. Executives are expected to update the Street on a number of initiatives including its search business, its premium services push and its broadband strategy.

Wednesday's deal with BT is Yahoo's second with a major telecommunications company. Last year, Yahoo and SBC Communications launched a co-branded DSL service that features Yahoo's front-end Web content and services bundled into SBC's Internet access. Yahoo gets a cut from subscription revenue and will split its advertising revenue with the telecom company.

The deal was touted by Yahoo as a way to diversify its revenue in the face of an anemic online advertising market. Executives have long promised more deals with broadband access companies, namely telecoms and cable providers. But to date, SBC remains the only U.S. provider under its belt.

From the description, Yahoo's BT offer mirrors a test product called "Yahoo Plus." Unveiled as a preview in November, Yahoo Plus is a package of the company's various premium services, similar to the one offered with the BT product. At the time, Yahoo Plus was priced at $7.95 a month, although company executives said the price was liable to change.

Yahoo's SBC product also features a smattering of premium services, but the deal extends deeper with Yahoo producing a customized Web browser for subscribers.

Yahoo is not the only Internet giant trying to strike deals with broadband companies. America Online and Microsoft's MSN are both pursuing deals with telecoms and cable companies to distribute their respective services. AOL, MSN and Yahoo have all signaled their intention to offer broadband versions of their service that can be purchased on a subscription basis.

In November, BT signed a similar deal with Microsoft, as part of the company's launch of the MSN 8 online service.

 

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