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Re:Viewing 2002 - A year in broadband

January to April: Getting lost in 'Broadband Britain'...
Written by Will Sturgeon, Contributor

January to April: Getting lost in 'Broadband Britain'...

As with every year, January started with a boat-load of good intentions, but as is so often the case many resolutions soon fell by the wayside. Ecommerce minister Douglas Alexander provided good news for the broadband have-nots in rural areas of Britain with word that the government was formally looking into ways of aggregating public sector demand for broadband in market towns. His intention was to come up with a single contract large enough to tempt private firms into investing in broadband infrastructure (see http://www.silicon.com/a50478 for more). At the time there were those who suggested Alexander's intervention was too little too late. The UK had been a broadband barren land for too long and many people by the start of 2002 were blaming the government - especially in light of Tony Blair's bold, but misguided pronouncements on 'Broadband Britain'. However, silicon.com columnist and self-styled Devil's Advocate Martin Brampton said the problem was one of simple economics (see http://www.silicon.com/a50828 for more). He wrote: "Most consumers are only willing to pay a limited amount for high-speed access and something like £40 per month is quite a lot." So the home users weren't willing to pay, but what of businesses? It appears the reluctance to part with cash as far as broadband for businesses is concerned may have been down to the service providers this time. "Why do telephone companies hold back?" asked Brampton. "The obvious reason is that fast communication links for business will not always be new revenue. DSL technology is capable of providing links that will be highly advantageous in cost terms against current leased line services. The latter provide a very significant revenue stream to incumbent telephone operators, especially BT." If it really was the case that the consumer inertia seen in January was a result of off-putting pricing then February was about to spring a few surprises. The month started in familiar territory with allegations that BT was ripping us all off (see http://www.silicon.com/a51428 for more). A comparison of wholesale prices across Europe revealed that the UK was head and shoulders above all other countries, with BT charging £30 per month, while Belgacom charged just £12 and the Spanish were shelling out a mere £14 per month to Telefonica for a wholesale package. Even the ailing France Telecom could knock BT into a cocked beret, with a monthly charge of just £18. 'Rip-off Britain'? Not for long. In Late February BT CEO Ben Verwaayen shocked us all with the announcement that BT was to slash the cost of wholesale broadband from £30 per month to £15. Verwaayen had succeeded in making a cut which his predecessors had said was impossible, so just how did he do it? Falling equipment prices certainly helped. At the centre of any DSL-enabled exchange is a DSLAM - an expensive box of tricks which sits in the exchange and handily turns phone lines into fat pipes. As far as rolling out broadband services is concerned it is essential. BT buys its DSLAMs from Fujitsu and Alcatel and around the start of 2002 these two companies both cut their prices by around 50 per cent - a saving the telco could then pass on to anybody buying wholesale broadband. So hats off to BT then? Apparently not - or at least titfers and deerstalkers remained firmly in place as rural Britain balked at the price cuts. From the reader feedback we received it would seem the only thing worse than not being able to get broadband is not being able to get cheap broadband (see http://www.silicon.com/a51669 for more). Some people are never happy. March brought more angry reaction to BT's wholesale price cuts, who by now must have been feeling that it couldn't do right for doing wrong. 'BT's broadband price cuts are "anti-competitive"'. This was the accusation being levelled at Oftel by Bulldog Communications, who was the last remaining alternative telco still chasing the promised land of unbundled local loops (see http://www.silicon.com/a52349 for more). Many had doubted Bulldog's ability to compete with BT on price when the bar was set at £25 - so the cuts to BT's wholesale price made life even harder for the company. In March Bulldog claimed the reductions created a monopoly for BT, with most ISPs choosing at this point to buy and repackage BT's wholesale product for just £14.75. Oftel declined to take any action and Bulldog was left teetering on the brink (see http://www.silicon.com/a51653 for more). If the countryside alliance was already vehemently anti-BT, then an announcement in April did little to improve the telco's reputation in so-called remote areas. BT told much of rural Britain that it could pretty much forget about ever getting broadband (see http://www.silicon.com/a52754). While this provoked an angry backlash, some accepted that BT was restricted by commercial imperatives, choosing instead to blame the government. While BT stated "there isn't the demand for broadband in the countryside at the moment to justify spending our shareholders' money on enabling exchanges" the government appeared to be dithering aimlessly. UK entrepreneur Bob Jones said: "After the government has spent months waffling on about 'Broadband Britain', BT has just turned around and said it's not going to do it." A confusion which was lost on nobody, not least of all silicon.com reader A Wheatley. He wrote: "Let's face it - Broadband Britain just doesn't exist and won't until the government pulls its finger out and makes it happen." In April BT also announced it was to DSL-enable a further 100 exchanges, meaning that two thirds of UK households would soon have access to broadband services. Broadband Britain may have been overstating the extensiveness of DSL in the UK, but "Urban and Suburban Broadband Britain" was beginning to take shape... slowly. Click here for May to August: Milestones and millstones http://www.silicon.com/a56859
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