Devil's Advocate: The UK as broadband backwater?

Columnist Martin Brampton, a director at consultancy Black Sheep Research, tries to find some answers to one of the big questions facing UK businesses and consumers. What lies behind the business politics?

Most people think the UK ought to have broadband communications. That being the case, why are we making such paltry progress in deployments? The answer seems to be total confusion over the character of the broadband market and some of that confusion seems to be down to the familiar phenomenon of fear, uncertainty and doubt.

The talk is mainly of broadband for consumers, of high-speed internet capability in the home. There is an obvious reason for this. As a new capability, telephone operators see it as an opportunity to tap into completely new sources of revenue. Home surfers are not used to having high-speed connectivity and are willing to pay extra money for the privilege.

So far, so good - but this is the point where things start to go wrong. Most consumers are only willing to pay a limited amount for high-speed access and something like £40 a month is quite a lot. The enthusiasts who are willing to cough up the money may well be disappointed, finding that fast access only shows up the sluggishness of much of the internet's web servers and interconnects. Always-on is an attraction, although beginners may well not be persuaded it is worth a hefty price premium.

Looking at these factors from the vendor side, things start to look a bit sour. Given the caveats, it will only be possible to sign up large numbers of subscribers with a sizeable marketing campaign. That is inevitably expensive and it starts to look doubtful as to whether a financial case can be made for a big push at current prices. Things look a lot worse if we listen to the optimists who expect to see broadband prices falling.

We have to suspect that something is badly wrong. Consumers are not the natural constituency for the introduction of broadband services. Businesses - and especially small businesses - are far more suited to becoming broadband customers.

So why do the telephone operators hold back? The obvious reason is that fast communications links for business will not always be new revenue. DSL technology is capable of providing links that will be highly advantageous in cost terms against current leased line services. The latter provide a very significant revenue stream to incumbent telephone operators, especially BT.

All kinds of obstacles then seem to be in the way of providing business DSL links. One is that the wrong technology is being offered. ADSL, being asynchronous, is suited to consumers with high-speed in only one direction. For more general data communications use, Synchronous DSL (SDSL) is more suitable, offering the same speed in both directions. Then there are all the usual delays with engineers being unavailable to carry out surveys speedily for new connections, alleged problems with lines, with some exchanges and so on.

All this, of course, reflects timidity on the part of the telephone operators, further encouraged by the unreality of the supposed competition. Genuinely competitive areas of technology deliver twice the performance every 18 months or less.

Nobody could imagine Intel holding back its latest processors for fear that people would buy less of them. Yet telephone companies shrink from giving more service for fear of their revenues shrinking. In fact, much the most likely outcome would be a large increase in demand that would leave revenues the same or larger.

It is possible now to rent cheap voice links from BT and then buy DSL equipment to achieve a highly effective data link. The drawback for many businesses is that this requires technical sophistication and leaves the buyer vulnerable to the various vendors blaming one another for any shortcomings.

We are left in a state of confused paralysis. The telephone companies choose the wrong target for broadband. They claim, with some justification, that there is no demand at the prices they need to charge to achieve consumer sales.

Meanwhile, potential business customers who could pioneer widespread use of broadband services more effectively are left out in the cold. It makes for a cosy life for telephone operators but has little else to recommend it.

Do you agree with Martin's assessment? Post a Reader Comment below or mail editorial@silicon.com with your thoughts.

** Martin Brampton is a director and founder of Black Sheep Research (http://www.black-sheep-research.co.uk ), an independent consultancy providing research, writing and speaking services on a wide range of business and technology subjects. Martin was previously a director at Bloor Research, and has worked with IT as a user and analyst for over 20 years. He is a frequent contributor to silicon.com's Behind the Headlines TV programme and can be contacted at silicon@black-sheep-research.co.uk.