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Story URL: http://comment.silicon.com/0,39024711,11032047,00.htm

Let the broadband meltdown commence
As if it hadn't already caused enough misery...

By editorial@silicon.com

Published: Thursday 14 March 2002

BT's broadband price cuts might have created a rush of business for ISPs but this flood could well end up drowning the very businesses it's expected to help.

Take Pipex, the ISP that slashed its retail price to a mere £23 following BTs wholesale cost chop two weeks ago. It's been inundated with new customers gagging for a go at downloading DVDs on half a megabit of bandwidth. Great news for Pipex, right?

Not so fast. It might be early days but problems have already kicked in and can be expected to spread throughout the industry.

UK customers up till now have been pretty few and far between. Meaning those few aren't used to having to share bandwidth capacity with too many other punters. Their experience of ADSL has been somewhat heavenly.

Trouble is, this new flood of custom is stressing-out ISPs like Pipex who will now have to break it to their users that life with ADSL isn't quite a bed of half-megabit roses. And the users are revolting.

ADSL is essentially a finite capacity service so the more users it has at one moment the less bandwidth each user gets to play with. That is, unless ISPs do what Pipex has been forced to do, which is add more pipes they could be in for trouble.

To keep the punters happy, Pipex has had to give them the access to three pipes whilst only charging them for one - which somewhat screws with its business model.

The result? There's likely to be a fall out among smaller ISPs. This recent flood of interest coupled with dashed expectations is just going to get bigger. Pipex was lucky it had two spare 155MB fat pipes sitting around but many smaller guys won't have that option.

Even if an ISP decided to invest in more gear from BT, the incumbent needs a disgustingly long lead time of 70 working days to get another fat pipe ready for use, at a one off cost of £40,000 and a yearly rental cost of a further £40,000 for the ISP. Not cheap.

ADSL's been a long time coming and it's going to be messy, but someone had to do it. Thank you BT.