Sky TV throws down gauntlet with $79/month full-speed UFB plan

Wednesday, 24 March 2021

Nearly two years after it was first tipped, Sky TV has entered the broadband market in competition with its telco partners.

Sky Television began marketing full-speed, unlimited ultrafast broadband plans to its pay-TV customers on Wednesday for what appears a market-leading price of $79 a month.

The company is initially only offering the service to about 500,000 Sky box households who are in ultrafast broadband (UFB) coverage zones – starting with those who have previously registered interest.

It plans to open up Sky Broadband to non-Sky TV customers – about two-thirds of households – later in the year, on terms it has not yet disclosed.

The launch of Sky Broadband was first tipped in May 2019 and brings Sky into direct competition with Vodafone and Spark, with which Sky has had different degrees of partnership over the years.

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Spark offers full-speed, unlimited UFB plans for $98 a month through its Skinny sub-brand, or for $110 through its Spark brand, while Vodafone’s full-speed UFB plan costs $103 a month.

A check of offers on broadband comparison site Broadband Compare indicates Sky Broadband also undercuts other alternative providers’ regular pricing.

But the cost equation may be more complicated if Sky customers have other “bundles” they can take advantage of, such as combining broadband with power or with telco incentives such as Vodafone’s “Best Mates”.

Extreme bargain-hunters could conceivably beat Sky's pricing by switching between providers annually in the hope of taking advantage of introductory offers.

Sky TV chief executive Sophie Moloney has said launching broadband was her top operational priority.

As with full-speed UFB services from other retailers, Sky Broadband should provide download speeds of about 900 megabits per second and upload speeds of about 400Mbps.

The majority of households might also find little if any performance difference with cheaper UFB plans that offer constrained speeds, most commonly 100Mbps.

Nevertheless, Sky’s offer appears designed to add up for a significant chunk of its pay-TV customer base.

Sky head of broadband Dan Kelly said it would offer other plan options soon.

“Heavy entertainment users often require more broadband [but] we know not all our customers’ needs are the same, particularly those with smaller homes or lighter broadband usage needs,” he said.

Sky’s $79 broadband plan includes a wi-fi 6 router – the most recent standard – and has a 12-month contract. A home phone service costs an additional $10 a month.

Households will need to be in a UFB coverage area and, for the time being, subscribers to Sky Starter in order to buy broadband from the company.

Customers will able be to get up to two wi-fi boosters to improve coverage within their homes for another additional $10.

If customers cancel their Sky Starter TV package during the term of their Sky Broadband service, its cost will rise to a more typical $109 a month.

Sky chief executive Sophie Moloney said last year that launching Sky Broadband was her top operational priority.

“I think it is definitely the right thing for us to be doing to provide value to our loyal customers,” she said then.

About 84 per cent of New Zealand households have access to UFB, with that expected to increase to 87 per cent by the end of next year.

Sky is not offering a copper or wireless-based broadband service for people outside the UFB coverage area.

The service has been developed through a partnership with Slingshot and Orcon owner Vocus NZ, which has provided Sky with network infrastructure and technical expertise.

Kelly said Sky staff would manage the provisioning of Sky Broadband but Vocus would initially be providing level-one technical support for customers, if they had a technical issue.

“This will then transition fully to Sky. Some day-to-day customer support will be managed by Vocus such as where a customer has a service issue,” he said.

Sky is understood to be hoping that offering broadband will reduce churn among its traditional satellite TV customer base at the same time as generating a new income stream for the firm as revenues from satellite television decline.

Kelly said the feedback from customers prior to the launch had been “the package and deal usually comes first but a close second is customer service”.

“We understand what matters to them and we are going all out to deliver with a Kiwi crew,” he said.