BT says it has signed up more than 150,000 customers to its BT Vision broadband video service. The British telecommunications company has been bundling its box free to new broadband customers. It says the figure is in line with its revised targets. It originally stated that it expected “hundreds of thousands” of BT Vision customers by the end of its first year of operation.

BT has cut the cost of its BT Vision package, offering free installation and a free set-top box for new broadband customers, subject to a £30 connection fee. Effectively, it is giving customers a free highly-specified digital video recorder in return for committing to its broadband service.

BT has not provided any separate operating costs or revenue figures against its video-on-demand services, but they are unlikely to compensate for the cost of customer acquisition, making its BT Vision service an expensive investment in retaining its broadband business in the face of fierce competition. It remains a relatively modest price to pay, given its annual revenues of over £20 billion.

BT has maintained its position as the largest provider of broadband in the United Kingdom. It now has 4.25 million retail broadband subscribers, with 35% of the market, although growth appears to be slowing. BT had 12.2 million wholesale broadband connections at the end of 2007, including 3.7 million local loop unbundled lines.

BT is continuing to build out its 21CN next-generation network. Its next generation wholesale broadband service will provide customers with speeds up to 24Mbps. Trials are currently underway in the West Midlands and the service will launch this spring. A new open Innovation Platform will allow BT and other communication providers to create software applications based on its next generation Ethernet network. Converged broadband and voice services will be launched from the end of 2008.

Commenting on the results for the period to the end of 2007, chief executive Ben Verwaayen said: “This has been another solid performance”. However, the BT share price fell by almost 10% to an annual low, reflecting market disappointment in its wholesale numbers.