BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Technology  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Friday, 27 September, 2002, 13:47 GMT 14:47 UK
Paying the price for cheap broadband
Bill Thompson
The broadband market is heading for trouble, says technology consultant Bill Thompson

Let's party like it's 1999!

After all, the internet service industry seems to think it is, with a rash of strangely-named home broadband suppliers offering cut-rate ADSL access to the internet in scenes reminiscent of the flat-rate unlimited access dial-up debacle of three years ago.

Then everyone was sold promises of all the internet you could possibly want for a laughably modest monthly fee, from companies that ran on a bank of reconditioned modems in someone's back bedroom.

There were even ridiculous claims from some larger players.

It was only when these companies started kicking users off for abusing the service, and pointed to the small print that said unlimited actually meant the odd hour here or there when we don't think too many other people will want to be online that the penny dropped - we had been sold a pup.

Do the maths

The reason was simple - and obvious to anyone who cared to do the maths.


Selling broadband and then saying but you cannot use it all the time and you cannot do stuff that actually uses the bandwidth is like selling a swimming pool but refusing to fill it with water because it might leak

Bill Thompson
If you have fixed costs for providing a service, in the form of the money you pay to BT for connecting your customers to your network, then you need to cover them before you can make a profit.

With a rack of modems you can do this by sharing each modem between several people - but then heavy users are taking up modems that other users might want and you end up having to kick them from your service.

This looks bad, but the alternative is going out of business. As, in fact, most of these small ISPs proceeded to do.

Bandwidth cheats

Now the chosen technology is ADSL, and it brings with it a different set of problems.

An ADSL connection cannot be shared. It is a direct link between a customer's phone socket and the hardware in the exchange. BT will charge you 14.75 per month per customer - and if you only charge your customer 12.99, like FreeDial, then the sums just do not add up.

You have to make money elsewhere - perhaps by providing an expensive premium rate support line, perhaps by forcing them to buy your over-priced connection kit.

Or perhaps by cheating. You can limit the bandwidth that people have access to by building your own network on the cheap and providing limited access to the internet.

Although your customers have a broadband link to you, once they are on the wider net they are getting second rate service.

Screen grab of ET Global Solutions website
Glut of new players offering cheap broadband
You can also try to stop them doing the stuff they want. Don Day of ETGlobal Solutions told the BBC recently; "We do not want introductory people to broadband to be affected by idiots who are streaming music all day and abusing the service."

This is an astonishing thing for an ISP to say, and indicates just how little these new providers understand the market and the technology.

Presumably Mr Day plans to stop his customers using some of the peer to peer or streaming audio services by limiting the bandwidth available to them or blocking them entirely.

BT is known to have experimented with this sort of technology earlier this year and was roundly criticised for doing so surreptitiously.

But these are precisely the services that are being advertised as the reason for getting broadband in the first place.

Getting what you paid for

Things could get better. The fact that BT cut its wholesale ADSL prices in half is a good indication that, like any monopoly provider, it was squeezing the market as effectively as it could until Oftel stepped in.


It is far better to accept that some good and useful stuff costs money and pay for it

Costs can be expected to fall further in future just because of economies of scale and improved technology.

The low cost providers are, to some extent, betting on this, hoping that their price points will be sustainable when prices fall in six months time and that they can stay in business until then.

But the pressure for cheap ADSL misses the point. With technology and the internet there is a cost associated with free stuff - what you pay for is what you get.

You do not have to pay for Linux but you will spend a lot of time configuring it and making it do stuff that Windows does out of the box.

I happen to think this is a worthwhile investment, but those who try to position Linux as free in the money sense are doing the operating system a disservice.

It is far better to accept that some good and useful stuff costs money and pay for it.

I pay 25 a month for my ntl cable modem connection and it is worth it, partly because I can sit there streaming music - in my case Radio 3 - all day while downloading massive files and chatting to my friends.

Selling broadband and then saying but you cannot use it all the time and you cannot do stuff that actually uses the bandwidth is like selling a swimming pool but refusing to fill it with water because it might leak.

The point is to have a service that works, not just claim things that you do not intend to deliver.

Bill Thompson guides you through the world of technology



INTERNET LINKS
See also:

27 Sep 02 | Technology
25 Sep 02 | Technology
26 Sep 02 | Business
20 Sep 02 | Technology
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Technology stories are at the foot of the page.


E-mail this story to a friend

Links to more Technology stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes