Jumping on the broad bandwagon

Under pressure from government, business and the public at large to deliver a broadband-friendly environment, BT bit the bullet last month and said it would cut £10 a month off the cost of its broadband service charges.

Cable companies and internet service providers immediately latched on to the discount to cut – and promote – their broadband offerings. BT, meanwhile, has been aggressively marketing its own product.

The internet is now a regular feature of most of our working lives. According to a study published by Continental Research last week, 745,000 – some two thirds – of the 1.1 million VAT registered UK businesses, have access to the internet. And a further 82,000 (7%) plan to go online within the next 12 months. Email keeps us in touch and search engines keep us informed: there aren’t many sectors that are not better off for using the web. But speed is an issue. Most home users and smaller businesses still rely on analogue connections. But with these, even the fastest modem available (currently 56Kbps) still takes around ten seconds to download an average web page.

And this is where broadband offers progress in leaps and bounds. With download speeds of as much as 300Kbps for streaming audio and video media, it also brings an ‘always-on’ connection as well as fixed price access.

Until BT’s cuts, this came at a hefty price: a set-up fee of several hundred pounds and a monthly fee of up to #50. But now, set-up fees have plunged below £100 and monthly fees have dropped, in many cases, to £25.

Now, runs the argument, with a ‘mass’ broadband market soon to be created by cheaper access, web designers will be free to bring new, exciting content to users. At home, for example, with the quality of video available over broadband, it would be possible to have a ‘movie on demand’ website available worldwide. At work, large software packages, could be quickly and simply downloaded.

According to the Continental Research’s report, getting a business online (something the government and BT hopes will be happening increasingly given the broadband price cuts) is stimulating the e-commerce market.

Nearly four in ten (427,000) UK businesses already have a website and a further 155,000 (14%) plan to have one by this time next year.

But it’s not all rosy. Users complain that often their broadband service is unavailable for days at a time. As many as 41% of broadband users experience problems in setting up and maintaining even basic services, according to a survey commissioned by services company, Motive Communications. Websites have been set up to give users a chance to sound off about the problems.

And a glance at a site like www.broadband-help.com demonstrates that the problems aren’t confined to just one or two service providers.

The broadband providers face other problems too. Cities are easily covered.

But outside of the urban centres coverage is patchier. One of the biggest problems in getting broadband can be the last distance to remote locations – it’s not yet a service available to everyone cost-effectively.

Earlier this month government e-envoy Andrew Pinder said the price of satellite broadband must be slashed in the next year to bring high-speed access to rural communities Pinder himself lives some 6km from the nearest exchange. BT is working on a new wholesale satellite offering, which could be available later this year, but it likely to be slower than broadband speeds.

There is another danger here; small businesses could be squeezed out.

Many of the telcos moving to offer broadband clearly have home users in their sights. And while some expressly court (small) business users, the bigger boys have bigger fish to fry. Three weeks ago BT said it was changing its broadband strategy to generate more cash by concentrating on fewer customers.

The move was widely seen as a reaction to the disappointing demand for the broadband services BT Ignite offers to small and medium sized businesses across Europe. Chief executive Andy Green told the Financial Times the company would be focusing on just 10,000 of its large corporate clients in Europe, saying that the company had been dissipating its energies with too many smaller businesses.

There is a lot riding on this. Broadband is key to the government’s objective of ensuring internet access to all by 2005. Though broadband itself is not part of that target, unless the early adopters of the internet are able to take advantage of faster download speeds at work and at home, penetration is unlikely to spread.