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Wednesday, 7 August, 2002, 11:20 GMT 12:20 UK
Cheap broadband comes at a price
Woman on PC
Broadband users could find getting help frustrating
The rapid fall in the price of broadband in the UK could lead to falling levels of customer service and may not be positive for the industry in the long-term, say experts.

Three companies - ET Global Solutions, fairADSL and V21 - are offering broadband services for less than 20 per month but the rock-bottom price means customer service will be minimal.


It seems to be going back to the bad habits of the telecom boom

Tim Johnson, Ovum
FairADSL charges 18.99 a month for its broadband service but offers an e-mail only customer service policy.

Net service provider ET Global Solutions has a skeleton support staff of 20 and charges a pound-per-minute for its telephone service.

Bad old days

Analyst Tim Johnson from technology research firm Ovum is not convinced that these firms will be able to make a profit with such a low monthly charge.

"I'm not sure what they are playing at," he said.


The main aim is to offer the cheapest possible access price for UK customers

Patrick O'Neill, FairADSL
"It seems to be going back to the bad habits of the telecom boom where companies said never mind profit, let's just get customers in."

"A price war might stimulate take-up in the short-term but in terms of a quality service with good support that is needed to turn broadband mass market, the thing doesn't really add up," he added.

Communication manager at FairADSL Patrick O'Neill disputes this, saying that a substantial number of users do not require bells and whistles with their broadband.

Value for money

"The main aim is to offer the cheapest possible access price for UK customers. Obviously that means we won't be able to offer the same level of service that other operators claim to offer but I pay 120 extra a year for support and I don't necessarily think it is worth it," he said.

Mr O'Neill is convinced that, with enough users, the service can become profitable and has been amazed by the response in the week since it was launched.


We have worked out the price very carefully and anyone offering a service below that is not making any money whatsoever

Spokesman, BT Retail
So far the "small support team" is coping with enquiries and there are plans to add a telephone service if necessary, he said.

"For people that need their hand held through the process we probably are not the right service, but for people that know a bit about using the internet then come on board," he added.

But Mr Johnson believes that 'no frills' internet service providers could be overwhelmed before they reach the volumes necessary to turn a profit.

Already established ISPs such as Pipex are struggling to cope with the number of queries to customer support lines.

The problem is compounded by the 'do-it-yourself' ethos of high-speed internet access. The price of the services began to fall when these self-install products became available.

No cheaper

BT Retail has launched its own 'no frills' ADSL service. At 27 a month, it is considerably higher than its cheap competitors, but the company believes this is the lowest price possible.

"We have worked out the price very carefully and anyone offering a service below that is not making any money whatsoever," said a spokesman for BT Retail.

"There is no way you can sell such a product under that price."

He believes consumers can be persuaded to pay the extra money because of the high level of support and service they will get.

According to market research firm Continental Research, broadband is beginning to achieve mass market appeal.

Its latest study found that 1.2 million UK homes had some form of fast internet access and it predicted another 700,000 homes would upgrade within the next year.


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