Friaco not to blame for broadband fiasco, says AOL

Broadband Internet penetration in the UK is pathetic, and BT's excuses don't hold water, according to AOL's research
Written by Peter Judge, Contributor

AOL has produced market research that it says disproves the myths by which BT attempts to excuse the slow roll-out of broadband in the UK.

The study demolishes the ideas that there is little demand for broadband, and that users are so happy with flat-rate dial access that do not want to move to broadband, said AOL communications officer Matt Peacock, at the Last Mile Europe conference in London on Tuesday.

ADSL in the UK has a dismal 0.3 percent penetration, compared with 2.5 percent in Germany, according to figures from research company Schema. Schema chairman David Brown blamed the UK's slow roll-out on telco delays, which he pointed out were in BT's interest; on the fact that unbundling plans became very complicated; and on poor business plans. "There has been a lack of understanding of where the revenue is coming from," he said.

BT's defence has been that it has offered broadband but there has been little demand, perhaps because many users find flat-rate access adequate and do not want to pay a premium on top. "Flat-rate is not available across Europe, and £14.99 is a good deal," said John Davies, chief operations officer for BT Wholesale. Both he and his colleague Bruce Stanford, BT Wholesale's director of broadband, had implied that the Friaco (Flat-rate Internet access call origination) flat-rate access service was partly to blame for the low penetration of broadband into Britain.

"When BT says there is no consumer demand, it really truly infuriates me," said Peacock. "We wanted to dispel four myths that are flying around: that flat rate access is so good that users don't want broadband, that customers don't understand broadband, that there is no content available and that ISPs make too much money from dial to want to offer broadband."

AOL spoke to more than 5,000 of its members -- "who are a good mix and reflect the make-up of the UK population," said Peacock, and found the vast majority wanted broadband. Far from satisfying their needs, Friaco seemed to intensify them as the figure was higher (85 percent) for flat-rate users than for dial-up users (67 percent).

The study also found that users understood the benefits of broadband, and would be prepared to pay substantially more for it. While it is notoriously hard to gauge acceptable pricing from market research studies, Peacock reckoned that 70 percent of those wanting broadband would be prepared to pay "substantially more" than they do now. He indicated that the cable companies' usual price of around £25 might be acceptable.

"BT should stop patronising consumers -- consumers are informed and smart," said Peacock. "This is not some esoteric concept -- it has been talked about for four years, and is in any newspaper from The Mirror to The Sunday Times. If you use the Internet remotely regularly, you know about broadband."

As to the myth of lack of content, "that really rattles my cage," said Peacock. "AOL Time Warner has 7,000 movies, 34,000 TV series and a million music copyrights." He acknowledged that much of that content could not be delivered cost-effectively, as BT's conventional IPstream service does not support the speed or quality required for movies.

"The conditions are ripe for the truly rapid adoption of broadband," said Peacock. "If the price is right, and the provisioning is robust and transparent, the consumer will accept it. The UK really, really wants broadband."

For everything Internet-related, from the latest legal and policy-related news, to domain name updates, see ZDNet UK's Internet News Section.

Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Telecoms forum.

Let the editors know what you think in the Mailroom. And read other letters.

Editorial standards