How high can broadband go?
Fierce competition among broadband providers may bring benefits in bandwidth if not price
After a lull in hostilities over the past few months, competition among UK broadband providers is warming up again as they try to tempt users by offering more bandwidth.
BT recently announced that its slowest retail ADSL service will soon be boosted to 2Mbit/s. Cable operator NTL replied by trumping that with a 10Mbit/s service, and Telewest joined the game of one-upmanship by mooting that 50Mbit/s will be the norm for its residential broadband services by 2007.
Then there will be the arrival of 24Mbit/s ADSL2+ services from BT as part of its 21st Century Network (21CN), and possibly services from other European operators attracted by a UK market that is less advanced than its continental rivals. Increased competition should also come from much faster unbundling of BT’s local loop, which may well render the wholesale broadband market almost as cut-throat as its retail counterpart for the first time.
It has long been known, though not widely publicised by NTL and Telewest, that the cable operators have sufficient capacity in the fibre-optic cables that they run to homes to ramp up customer bandwidth as and when they want – or more pertinently when market conditions prompt them to do so.
Previous services have been capped at 1Mbit/s and 2Mbit/s not because the operators were unable to offer more, but only because this was considered to be the market norm and matched what rival DSL providers were offering at the time.
The same does not appear to be true of ADSL services, which we are told continue to need network upgrades – in the backbone, the exchange or even the local copper telephone lines connecting customers – in order to boost speeds.
If this is true, the capacity race is one that the cable operators will always win, at least in those parts of the UK to which their coverage extends.
Beyond those borders, homes and offices are forced to either wait for the arrival of ADSL2+, or hope that the providers engaged in local-loop unbundling are able to offer them Synchronous DSL services up to 8Mbit/s.
Alternatively they may choose to look to the WiMax wireless broadband services on the horizon, though these have yet to prove themselves either reliable or able to compete against the current low prices of wired broadband.
In the meantime, more consolidation in the telecommunications market is likely, and one provider in particular is going on the acquisition trail to inflate itself into a serious rival to BT.
Whether Cable & Wireless can successfully become a genuine UK telecoms giant is anyone’s guess, but if it keeps up its current rate of acquisition (unlikely in the absence of a bottomless pit of money), we may soon be looking at a market dominated by just two or three major players.