A great year for Broadband Britain?

Prices fell, demand soared, triggers were set and those in the broadband wilderness were told that one-way satellites are their salvation. Just don't mention 28GHz.....

The last 12 months have seen real progress in the drive towards Broadband Britain. On 31 December, 2001, there were barely 300,000 broadband customers in the UK; now there are some 1.3 million. Today, around 34,000 new broadband connections are being sold each week -- up from just a few thousand per week a year ago. It's amazing what a few price cuts, ad campaigns and new products can do. Many problems still remain, though. Some six million homes still can't even get ADSL -- pretty much the same number as last year. Also, there still simply aren't enough serious players at the wholesale level -- which experts are warning will mean a less competitive market in future years. This is why coverage and competition will still be key broadband issues in 2003. Despite the availability problems, there have been many successes in 2002. Sharing out the credit for this fairly is a tricky task, but let's start with BT, which has gone a fair way towards shaking off its reputation as the Wicked Uncle of the broadband pantomime. Ben and the art of broadband revival
In February, just after installing himself in the chief executive's office at the top of BT Centre, Ben Verwaayen declared that BT would be treating broadband with much more importance than before. "Broadband is the future for Britain and we're putting it at the heart of BT's plans for growth in the UK mass market," Verwaayen vowed. Fine words indeed, and Verwaayen was soon buttering the parsnips too as BT halved the cost of its wholesale broadband products in April. ISPs followed suit, and the cost of consumer ADSL dropped from around £50 per month to under £30. The price cuts were followed by a flood of adverts plugging the benefits of broadband. After winning plaudits for subsidising the marketing campaigns of ISPs that competed with BT Openworld, BT then generated more controversy by splashing £23m on ads for its new "no frills" product -- BT Broadband -- immediately after funding a separate £10m, ten-day, broadband awareness drive. The price cuts and the ad blitz both played pivotal roles in the current broadband boom -- but how much credit does Verwaayen really deserve? Some BT insiders have claimed that The Flying Dutchman (as the BT chairman Sir Christopher Bland labelled him) is rather a jammy dodger. Work on these price cuts had been going on for months before Verwaayen took the BT gilder, they whisper, adding that the DIY ADSL product -- which also helped boost the market by dramatically cutting the start-up cost of getting broadband from BT -- had been unveiled in December 2001. Both points are true. But it was only in October 2001 that Sir Peter Bonfield -- the previous BT chief executive -- had said that ADSL prices cuts weren't possible, a position that subsequently unravelled within months upon Verwaayen's arrival. Despite the successes of the price cuts and ad blitz, some of BT's many critics are still up in arms about one thing or another. Freeserve had been bouncing up and down screaming for months that BT Broadband -- which is offered by BT Retail, not Openworld -- is a dastardly attempt on BT's part to stitch up the broadband market to itself. And opponents of BT Broadband would have you believe that Oftel is playing the role of cartoon dog Muttley -- sitting in the cockpit alongside BT's villain when it could be trying to prevent what they see as BT's devious trickery. But our trusty regulator insists that there are no problems with the "no frills" product, that it's OK for BT Broadband customers to be charged via the BT Blue Bill, and that "there ain't no cross subsidy 'ere." Oftel didn't even manage a squeak when, in December, poor old Openworld was chopped into two bits and fed to BT Retail -- which must mean that this is OK too. Ready, willing and cable
There's rather more to Broadband Britain than just BT, as any government spokesperson will tell you if you ask about the soggy firecracker that is local-loop unbundling. Our broadband market is just stuffed with competition, insists the DTI. Look at the cable companies -- a combined market share in excess of BT Wholesale must mean that all is well. Prior to BT's price cuts, cable broadband was also much cheaper than ADSL. Now, the two technologies are similarly priced, but NTL and Telewest are still differentiating themselves -- such as by offering 1Mbps broadband for just £35 per month -- and warmly embracing technologies such as wireless home networking and Xbox online gaming. NTL is even letting ISPs resell their products via its network, just like BT Wholesale. Of course, there's some room for improvement on the financial side. In Dickensian times, anyone running up multi-billion pound debts could look forward to a trip in the local clink. The 21st century has a more relaxed approach to such arrears, so instead NTL is currently enjoying a stay in Chapter 11. Will 2003 see a merger between the UK's two cable firms? Those within the firms say that nothing is imminent, but it will be more of a surprise if in 12 month's time the pair aren't at least betrothed. Trigger happy BT
The most cursory peek into the ZDNet UK reader postbag will show the depth of feeling in Britain's more rural areas about the broadband coverage issue. Why, these frustrated Internet users ask, can't I get ADSL, when my mate half a mile away can? What has BT got against my local exchange that means it won't upgrade it to broadband, they ask. Sometimes they swear as well. Faced with this rising tide of unrest, BT came up with a cunning scheme. It calculated how many customers it would actually need in these broadband black spots before it could risk sending out a team of engineers to upgrade the exchange without frightening the shareholders. Now, it can say to irate residents of Cambuslang, Irvine Stanecastle and Biggin Hill that they just need to find a few hundred fellow broadband enthusiasts, and high-speed Internet access can be theirs. Being BT, though, nothing is ever quite that simple. For every local exchange that has hit its trigger level, we've had evidence of fraud affecting the scheme, as the strain of living with narrowband gets too much for some punters and they start inventing fictitious broadband-hungry neighbours. Auction stations
No story is complete without some element of farce. In the tale of Broadband Britain circa 2002 it was the 28GHz auction that provided the shambolic touch. In truth, this little fiasco first drew breath way back in 2000, when the government attempted to get telecoms firms to buy licences to offer broadband fixed wireless services using the 28GHz band of the radiocommunications spectrum. This followed the earlier 3G auction, but this time the telcos had wised up a bit and largely balked at paying even the £1m or £2m reserve price for the licences. Fair enough, you might think, and file the whole thing away under B for Bin. Not the DTI, though. By the summer of 2001 they'd decided to put the remaining 26 licences back on the market in a new auction destined to run for 12 months. Guess how much firm interest they received? Throughout 2002, the embarrassment of Auction II dragged on as it became clear that no one at all was going to bid this time. So, come autumn 2002, the government found it still had 26 licences on its hands, which were looking grubbier and less enticing by the day. So, you've held two failed auctions. Do you give up? Do you hire that nice Lovejoy off the telly to flog the licences for you? Or, do you tweak the rules a smidgen, cross your fingers, and mutter 'third time lucky'? Perhaps the government knows what it's doing this time. Perhaps there'll be a flood of interest in 28GHz licences from 3G operators, now that they can be used for network backhaul as well as for services. Or perhaps it'll all go wrong again. Better to receive than to give
Eventually, wireless broadband will be the solution to the rural broadband divide. But, for now, satellite broadband is the way to go. This autumn, SatDrive and Isonetric both launched one-way satellite broadband packages that are aimed at those who can't get ADSL or cable broadband, but who balk at paying around £50 per month and an installation fee of around one grand for a full satellite service. The downside with this kind of product -- which should also be offered by Everywhere! Broadband early in 2003 -- is that users have to use a phone line for the upstream connection, which is not ideal for applications such as video conferencing or gaming. Still, if you're stuck on the wrong side of the broadband divide, and your neighbours aren't interested in getting broadband, this could be your best hope. Looking forward
So, yes, coverage and competition are both key themes for next year. Here's hoping that BT Wholesale finds a way of lowering its trigger levels, that local-loop unbundling manages to sparkle, and that the government's enthusiasm for public sector broadband helps to make our rural idylls rather more attractive in the eyes of service providers.


See the Broadband News Section for the latest on cable modems, ADSL, satellite and other high-speed access technologies, including a comprehensive guide to the best deals out there. Let the editors know what you think in the Mailroom.

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All