Britain gets a new broadband divide
Published: 19 Apr 2005 15:30 BST
Talk of a broadband divide used to be centred on the haves and the have-nots of high-speed access as a result of BT's feet dragging over rolling out ADSL to rural areas. But now that the majority of those who want it — around 96 percent of the country according to BT — have access to a broadband-enabled exchange, the protesters appeared to have been appeased.
However, the increasing perceived need for faster access through fatter pipes is threatening to change the rules of the game once again and create a new broadband divide — now based around costs and speed rather simple access.
The roots of this new broadband status quo can be traced back to a recent decision by UK Online to slash the cost of its high-speed Internet access products in certain areas. This move, announced in mid-April means that a 512Kbps connection from UK Online will cost just £9.99 a month, with a 2Mbps connection costing £19.99 a month.
The problem is that UK Online — the retail ISP of Easynet — is only offering these prices to customers who are connected to one of the 240 BT local exchanges where Easynet has installed its own equipment, a process known as local-loop unbundling (LLU). The rest of the population will have to pay £19.99 for a 512Kbps link and £29.99 for the 2Mbps option.
UK Online says that these lower prices illustrate the benefits of LLU versus reselling one of BT's wholesale broadband packages. But with LLU operators focusing on urban areas, where there are typically more customers per local exchange, some in the industry fear that rural areas will miss out.
"More competition is better for consumers, but there are concerns about the availability of low-cost services across the UK. It's a big issue, I think," says Malcolm Corbett, director of the Community Broadband Network which represents many local broadband initiatives. Corbett claims that the UK government's recently published digital strategy includes concerns about the equality of access to broadband.
LLU had largely been a failure in the UK, with just Easynet and Bulldog — now owned by Cable & Wireless — unbundling many exchanges. But last year Ofcom forced BT to cut the cost of unbundling a local exchange, which has encouraged many telcos to consider it again. Tiscali, for example, announced this month that it will spend £90m over the next three years on unbundling in the UK.
UK Online insists that its offerings in non-unbundled areas are still competitive, and hints that its new lower prices could spark a price war. Chris Stening, general manager of UK Online, points out that his firm had launched an 8Mbps consumer service last year, after which BT began trialling its own 8Mbps product.
"Would that have happened if we hadn't done what we did? We're driving the market," claims Stening.
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