UK internet consumer business model 'doesn’t work' says Level 3

By Peter Gothard
02 Aug 2012 View Comments
broadband-internet

Current internet subscription business models are ineffective, and are holding up development of services in the UK, fibre communications firm Level 3 has told Computing.

James Taylor, EMEA content service product manager at Level 3, which is currently working on advancing and refining technology for streaming sports broadcasts, said that ISPs like BT are operating a model that impedes faster, cheaper internet for all.

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"Look at their business model," said Taylor. "As a broadband subscriber, you can pay them the same amount every month and that never changes, but you're going to consume more and more bandwidth. So that basically means that they have a fixed income and a variable cost, so that business model at some point doesn't work," said Taylor.

Such a model, said Taylor, will "absolutely affect the way in which [BT] allow the fundamental adoption and consumption of online content."

Taylor suggested that contracts in which small cost increments are gradually introduced for data use is the way forward.

"That's exactly how the industry has to change in order to continue to fuel growth," said Taylor. "It's a long-term business model if the cost increments are small enough." 

Taylor believes overturning the current system, "starts with the ISPs".

"Many of them are our customers, so we have these conversations all the time," Taylor told Computing.

ISPs, explained Taylor, offer a range of contracts from the "bargain basement, all you can eat model" to higher cost contracts that "offer better reliability". But none, he said, "drives traffic enough to make the model work" in terms of encouraging consumers to consume more data, which could be monetised.

Taylor also cited legacy architectural issues as an area that requires change. Widespread installation of fast fibre connections will help to reduce costs and put the price that UK customers pay for fast broadband on a par with Japan, China and South Korea, he argued.

Encouraging people to consume more content and bandwidth, said Taylor, but doing so with a reliable quality, is key to development of the internet in the UK.

"We need the internet being connected to companies that know your preferences, and who can facilitate access to interactive content. And that's the sort of thing that will drive people to consume fundamentally more content or bandwidth, and that's what we want to facilitate."

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