Broadband Britain still has a long way to go

BT's price cuts are a major step forward for UK broadband and have received wholehearted support from businesses. But price isn't everything and there are still significant issues to be addressed before Broadband Britain becomes a reality.

Availability is still a concern, with only 60 per cent of the country having access to ADSL. Content is patchy and consumers may still be reluctant to pay for high-speed internet access with so few services and applications which require it.

From a business point of view the concentration of enterprise-class infrastructure in the south east may undercut one of broadband's main selling points: that it does away with the constraints of location.

To attract hi-tech business into the regions, bandwidth availability needs to be guaranteed, according to Unilever's European vice president of support services Lars Stork.

Missing link

"We need the right infrastructure to be able to do business where and how we choose and, if we don't have it, we are missing the key link," he said. "This is good news for consumers but, from a business perspective, the question is how quickly this can be rolled out, not just in London, but nationwide."

Price cuts for consumers will help develop the market and restore City confidence but, without clear government involvement, investments will remain centred on the south east, explained Beaufort International principal consultant Richard Cadman.

"Given that the sector is in debt up to its eyeballs, BT won't make a pot of money over night by slashing its prices," he said. "If the market picks up then we will see the City come back in, but this won't happen just by BT cutting its prices. It will require active government participation through fiscal incentives to encourage investment."

"BT is doing its bit, but that's only one step on a very long road, and government needs to do its bit as well," he added.

London calling

Cadman believes that, without government incentives, investments will continue to focus on London. "Telcos are not answerable to government so they will invest where they will get the quickest return, and that is in London," he said.

Government advisory body the Broadband Stakeholder Group (BSG) also stressed the need to create a universally available service.

"There is an urgent need to extend broadband coverage to areas that aren't served by commercial broadband services," said BSG chairman Keith Todd. "This will require partnerships between regional and local authorities as well as smart purchasing from central government."

BT chief executive Ben Verwaayen has indicated that price is only one element of his company's focus on broadband. "How will we reach our target of one million broadband customers by 2003?" he asked. "By lowering our prices, creating a better customer experience, developing wider access to broadband and making sure we have new ways of marketing it."

Money matters

Although the telco is keen to work with regional development agencies and local groups, Verwaayen emphasised that the company's decisions will be made only on commercial grounds.

Telecoms watchdog Oftel has responded positively to BT's announcements, but the cuts could spell the end of the kind of infrastructure competition that local loop unbundling was originally designed to provide, according to Tim Conway, director of industry affairs at the Computer Software and Services Association (CSSA).

"This is the death knell for any significant infrastructure competition, so the issue will be to provide access in more exchanges and to wider areas than are currently available," he explained. "The challenge for Oftel is to oversee this network rollout given the market structure."

Customer choice

Rival operator Cable and Wireless has warned that lower wholesale prices may not be such a benefit in the long term.

A spokesman said: "At first glance the reduction in prices looks like good news for consumers, but this is a short-term view and doesn't change the long-term issues of competitiveness in the UK market.

"If anything, this hampers the prospect of broadband competitiveness even further because the only viable model for rival providers is to resell BT's wholesale produce.

"Broadband Britain is still reliant on BT and that's not a good thing. We would like to see a situation where customers have the choice of price and services."

COMMENTS:

"Provided BT's wholesale prices remain fair, today's announcement is excellent news for consumers and businesses. It will allow resellers of BT's wholesale broadband service to pass the savings on to customers and be the catalyst for a major step change towards higher broadband use in the UK."
Douglas Alexander, ecommerce minister

"The BSG welcomes efforts by all market players to reduce broadband prices to consumers. Today's announcement marks a significant shift in BT's wholesale DSL pricing. However, price is only part of the equation. The development and availability of content and extending coverage are equally important."
Keith Todd, chairman, Broadband Stakeholder Group

"Today's announcement has the potential to bring about a step change in the take-up of broadband by consumers and small businesses. The cost of broadband is clearly an important factor in take-up and the price reductions proposed are very significant."
David Edmonds, Oftel director general

"This is fantastic news and we expect it will really get things moving. This is what the internet service providers [ISPs] have always needed as the cost from BT was the lion's share of the price paid by the customer."
David Rickards, managing director, Pipex

"This is a key turning point and is a much welcomed step in promoting the up-take of broadband, which will allow retail ISPs to bring their prices down."
Tim Conway, director of industry affairs, CSSA

"Any reduction in price has to be good news and this is about the right level, but that doesn't mean it's a home run. A lot of work still needs to be done rolling out broadband infrastructure and producing the right content."
Richard Cadman, principal consultant, Beaufort International

"The task now is to build a national partnership that will stay focused on the goal: a UK that can compete in tomorrow's global markets."
Colin Barker, editor, vnunet.com's sister publication Computing