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The fact that broadband never runs as fast as the advertised headline speed of 'up to' however many 'meg' is of no great surprise to many, but based on a survey of 2,000 consumers, O2 is suggesting that the average consumer is wasting money buying a package which is faster than they need. The research shows that the average user is paying for a package faster than 8Mbps, whereas most users' requirements don't exceed this. The problem is somewhat exaggerated by providers that do not offer customers slower product options, or simply make regrading difficult or expensive. This equates to over £2m being wasted each day.
Some of the figures produced by the survey show that the common up to ~20Mbps packages cost £202.70 a year, where as the average price for an 'up to 8Mbps' package is £126.37. Of course the calculation is not as straightforward as every person needs to assess what they do with their broadband connection, however there are clearly savings to be made. Users should also be aware that in some cases, if you drop from an 'up to 16Mbps' package to an 'up to 8Mbps' one, it may revert from the ADSL2+ standard to ADSL, giving a small speed drop those currently experiencing 4 to 5Mbps throughput, or the usage allowance may not be sufficient for the user.
It may be unusual for a broadband provider to be suggesting some users would be better off on a slower package, but the survey does support the suggestion that most users simply don't use the Internet in a way which requires a super-fast connection, leaving millions of households potentially paying too much for their broadband service.
The survey found that less than a fifth of respondents used their broadband connections for streaming video:
"62% of broadband consumers in our survey would prefer their ISP to provide packages based around their specific needs. Therefore our industry needs to tailor its services to people's needs, help consumers understand exactly what they should be buying and avoid marketing based solely on speed."
Felix Geyr, Head of O2 Home and Broadband
In effect the new packages that O2 is launching next week are aiming to try and help consumers make an informed choice, with the product selling itself more on what you intend to do with your broadband, rather than focussing on the headline grabbing speed figures. One important aspect of the new packages is that customers have the option of a simple 30 day rolling contract (£29.99 connection fee, rising to £54.99 for those without an O2 mobile phone) or they can opt for a 12 month contract. As many of the larger providers are standardising 18 and 24-month contracts, the rolling monthly contract is very welcome.
| The Basics | The All Rounder | The Works | |
|---|---|---|---|
| Ideal Use: | Just for everyday surfing and email | Enjoy music and catch up on your favourite TV. Perfect for smaller households. | Best for movies, connected gaming and larger households |
| Downloads: | 20GB a month | Subject to FUP | Subject to FUP |
| Also included: | G class router | N class router | N class router, static IP address, Annex M uploads |
| Broadband + Line rental, O2 mobile customer | £15.50 | £19.50 | £27.50 |
| Broadband + Line rental, not O2 mobile customer | £20.50 | £24.50 | £32.50 |
| Broadband only, O2 customer | £8.00 | £12.00 | £20.00 |
| Broadband only, not on O2 | £13.00 | £17.00 | £25.00 |
All the products are delivered using ADSL2+, although users on the top-end "The Works" package can opt for uploads speeds of up to 2.5Mbps if they live close enough to the exchange. The fair use policy (FUP) will be different for The All Rounder and The Works, thus if you are one of the small number who download lots of music and films then best to look at The Works. Although O2 do not use the word 'unlimited, they do suggest you can download 'as much as you want (subject to FUP)', and O2's fair usage policy is quite generous from our experience. If you do exceed this, O2 will get in touch to ask you to either upgrade or change your usage patterns.
O2 had some 700,000 fixed line broadband customers at the end of June 2010, so it is rapidly catching up with Orange. Factors such as the 30-day 'Happiness Guarantee' that means customers can cancel their contract (even a 12-month one) if they are not happy with the service within the first 30 days after signing up, are helping them to grow rapidly.
The ITU (International Telecommunication Union) is calling for broadband to be ubiquitous and affordable as they expect high-speed networks to transform the world. Currently around 30% of people in wealthy Western European countries have a broadband subscription and this generally costs about 1% or less of monthly income. The BRIC countries (Brazil, Russia, India and China) have penetration of around 10% and costs around 5% of the average income whilst in the poorest countries, fixed broadband penetrates below 1% and costs more than 100% of the average monthly income.
| Country | Fixed broadband subscriptions per 100 inhabitants |
Affordability of fixed broadband as percentage of monthly income |
|---|---|---|
| USA | 27.1% | 0.5% |
| UK | 29.8% | 0.63% |
| Canada | 29.7% | 0.71% |
| Australia | 25.4% | 0.77% |
| France | 31.1% | 1.02% |
| Germany | 30.4% | 1.23% |
| South Korea | 33.8% | 1.41% |
| Russia | 9.2% | 1.66% |
| Brazil | 7.5% | 4.58% |
| India | 0.7% | 5.84% |
| China | 7.7% | 7.19% |
"Broadband is today's truly transformational technology. As with the dawn of other inventions that profoundly reshaped our society, most of us are yet to see the tremendous power and potential of these networks. It's not just about fast web browsing. Through e-health, e-education, e-government, smart grids, smart transport systems and much more, broadband will power economic and social progress in the 21st century. When we first harnessed electricity, we thought: 'lighting'. But the advent of the power grid was the tipping point that led to the building of skyscrapers, the rapid rise of large-scale industry, mass mobility, and even – through labour-saving home appliances – the emancipation of women."
Dr Hamadoun Touré, (Secretary-General) ITU
Dr Touré is also vice chair for the Broadband Commission who will be presenting a report to the UN on the 19th September which will detail the power broadband has to improve our world. They believe that it has the same level of importance as the basic infrastructure of a modern society such as roads and the electricity network.
Virgin Media is wading into the current round of broadband speed battles with research by ICM. The research indicates some nine out of ten people find broadband advertising misleading and some 67% are frustrated with providers who fail to deliver on promises.
The survey which talked to 1000 people, showed that price followed by speed are the prime drivers when choosing an ISP. What is unknown is what broadband providers these people were using. If it was a representative split of the UK broadband landscape, roughly 20% of those surveyed should be using a Virgin Media cable broadband service. In theory cable customers should be happier, since there are none of the issues with regards to telephone line length, which is the largest factor in people not reaching their 'up to' speed.
To help inform its customers Virgin Media now plans to publish the typical average speed received by 66% of customers over 24 hours. These will be published each month for its 10Mbps, 20Mbps and 50Mbps services on the website http://www.virginmedia.com/speedhonesty. The testing is carried out by customers who have opted to run a Samknows performance testing device in their home.
It is not totally clear whether the Virgin Media National products will be included too. The use of M/L/XL for the national product names means some may confuse them with the cable products that use similar naming (Virgin Media cable services pass just under half the households in the UK). In the press release Virgin appears to gloss over its own DSL based products that suffer from the same degree of speed loss due to line length as all other DSL providers. In a survey of one, when trying to order a Virgin Media National product it claimed a speed of 5 to 6Mbps right now on my line, while BT Wholesale estimated 5Mbps. What is odd is that while it lists the UK average speed as 6.5Mbps, the estimate was considered 'Great news! Your phone line is lovely and speedy'. Strange that something that is below average is lovely and speedy, confused - I'm sure some people would be. Virgin Media it seems needs to do some more communication between its various business units.
Cable broadband products which are a mixture of fibre and coax will always have an advantage speed wise compared to DSL products. With DSL, even if the providers had no contention/congestion, only around 78% of lines would connect at 5Mbps or faster.
It is good to see a provider trying to communicate speeds better to users, but at the end of the day, typical and average figures do not explain to an individual why something like paid for video download onto their games console is taking a long time, or why one site is faster than another. The whole speed issue is complex and for too long was glossed over. In the days of fixed speed broadband lines there was little issue, but now with products ranging from 0.1Mbps through to 100Mbps on sale in the UK, users are bound to be confused. Many will assume a webpage that takes 10 seconds to load on a 0.5Mbps connection, would be many times faster on a 10Mbps connection (in theory 20 times faster) and while it will be faster, the protocol (HTTP) behind webpages results in lots of small chunks of data, so you might only see a doubling in loading speed.
Fibrecity have announced that they are now ready to take registrations to connect to the fibre network they are deploying in Dundee. Residents and businesses can apply for a free connection that will link up their home or business to the fibre network, allowing them to take advantage of faster broadband services as well as TV and potentially other media that could be delivered over the next-generation fibre-to-the-home (FTTH) network.
"Now that all the planning and negotiations for the build of Fibrecity Dundee are concluded, it is important that residents that want to apply for a free connection do so quickly so that they don't miss out.
Fibrecity Dundee will introduce more competition to the market. Its open access network will enable consumers to benefit from super fast broadband available through a choice of service providers.
No longer will people need to worry whether their service provider is misleading them about the broadband speeds that their network can support."
Paul Lennox, (Project Director) Fibrecity Dundee
The company plan to connect up around 4000 people a month with around a million homes connected over the next four years. To register for a free connection visit www.getreadydundee.com or call 0800 954 2020.
Down in Bournemouth where the company are already installing their fibre network, some problems have occured. Over 200km of fibre optic cable have currently been installed but Fibrecity's contractors have cut through some existing cables in the process with some Virgin Media customers losing access to TV and telephone services. The 'microtrenching' technique used by Fibrecity to deploy their cables is supposed to lay their network above any other cables which may be in the ground but it seems to be that in some cases, these aren't as low as expected.
The ASA have announced today that they will be clamping down on online advertisements following a significant change to their remit which will now include digital advertising. Previously the ASA had no powers to post sanctions against advertisers online even though the organisation received over 4,500 complaints since 2008. The adjustments made by the Committee of Advertising Practice (CAP), the body responsible for writing the CAP code that the ASA enforces, will force advertisers to be open and honest in any marketing communications, including those on their own websites and also through non-paid for space such as Facebook and Twitter.
"This significant extension of the ASA's remit has the protection of children and consumers at its heart. We have received over 4,500 complaints since 2008 about marketing communications on websites that we couldn‟t deal with, but from 1 March anyone who has a concern about a marketing communication online will be able to turn to the ASA."
Lord Chris Smith, (Chairman) ASA
Including the current sanctions which the ASA operate for any media such as not allowing ads to be run again, further sanctions can be taken which include the ASA forcing the removal of paid-for search advertisements if they are non-compliant (and with agreement of the search engines) as well as the ASA's own paid-for search advertisements to highlight an advertisers non-compliance with the relevant code. The new rules will come in to force on the 1st of March following a 6 month grace period to promote awareness.
We hope the ASA will soon announce similar action with broadband advertisements which currently advertise speeds as 'up-to' a specific limit even when the majority of customers will never see this kind of speed. This is currently under review with the advertising code writing bodies.
BT have reached the 15 million milestone of broadband connections that use its telephone network the company has announced today. Through its own retail arm, BT have around 5 million customers, but many other providers use BT's network to provide broadband as there are few alternatives for the 'last mile' which connects premises up to BT exchanges using telephone lines. BT's Openreach arm controls this last mile which is rented by both BT Wholesale and other operators such as TalkTalk, O2 and Sky who provide broadband using their own equipment located in BT exchanges through local loop unbundling (LLU).
"Broadband Britain has been a success story with widespread availability, low prices and high take-up.
BT is now investing a further £2.5bn to roll out fibre broadband to two-thirds of the UK. This will help the UK climb the league tables for speeds, one of the few areas in which we don't lead the world.
Olivia Garfield, (Strategy Director) BT
Broadband has been available in the UK since around 2000 when both BT and the cable operators NTL and Telewest (before they merged and became Virgin Media) deployed ADSL and cable broadband respectively on their networks which brought a much needed boost to UK broadband speeds. In august 2002 BT had around 200,000 broadband connections on its network and the increase by 14.8 million since this date shows around 5,000 new broadband connections have been added per day on average. There has now been a decline in the rate that broadband connections are added as a critical mass of customers has been reached, but there are still customers out there to be gained.
A new focus is in place which sees BT investing in providing faster broadband. The company is in the process of rolling out ADSL2+ using its 21st Century Network which delivers up-to 24meg broadband, although actual connections speeds will be lower, allowing it to reach 18 million homes and businesses by Spring 2011. BT are also investing in fibre-to-the-cabinet (FTTC) technology which delivers faster broadband speeds of up to 40meg, with some limited roll-outs of fibre-to-the-home (FTTH), offering 100meg broadband, also being deployed. This technology is expected to reach around 66% of homes and businesses by the Summer of 2015.
30.1 million adults use the Internet every day or nearly every day according to statistics released today by the Office for National Statistics ONS. Just over a half of these (17.4 million adults) used the Internet to watch television or listen to the radio, a huge increase over the figures from 2006 when the only 6.4 million did these activities. 73% of households had access to the Internet (as also recently reported by Ofcom)and 31 million people purchased goods or services online in the last 12 months. Of these, the most popular purchases were clothes and sporting goods (52%) whilst this figure increased for women (at 57%). Men however favoured purchasing films and music with these making up 48% of purchases. This shows that our population is increasingly aware of the Internet and the benefits that it brings, particularly in cost savings of purchasing goods and services online.
The report collates statistics based on various socio-economic and demographic indicators. Within age, 60% of those over 65 had never used the Internet, comparing with 22% of those aged between 55 and 64. Just 1% of those aged 16 to 24 had not used the Internet. London saw the highest density of Internet usage at 87% of adults. The North East had the lowest at 71%. Under marital status, 92% of single adults had used the Internet, compared with 81% of married and just 32% of widowed. What the figures don't show is the age of the widowed adults which is likely to include more people in the older age groups which could play a factor in this weighting.
Type of employment also swayed Internet usage with 91% of those in managerial of professional occupations having used the Internet whilst 67% in semi-routine and routine occupations. Equally, this was mirrored somewhat by education with 97% of those educated to degree level or higher having used the Internet whilst 45% of those without formal qualifications had. Income also played a roll with 98% of people earning more than £41,600 having used the Internet whilst 69% of those earning less than £10,399 had.
"Since 2006 we have seen a significant increase in the number of people using the Internet, with the number of adults accessing the Internet every day almost doubling to just over 30 million, though the UK is some way off from being completely online. Usage is closely linked with a number of socio-economic and demographic indicators with those less educated and on lower incomes less likely to access the web.
We have also seen changes in the way people connect and in the frequency of connection, with 31 per cent of Internet users connecting via a mobile phone in 2010 compared to 23 per cent in 2009. The use of wi-fi hotspots continued to rise with 2.7 million people (7 per cent of Internet users) used wireless hotspots at locations such as cafes, restaurants, and hotels."
Mark Williams, Office for National Statistics
The i3 Group, the company behind Fibrecity and H2O Network, have appointed Mark Smith, previously CEO of BT Broadcast Services, as CEO of Opencity Media Ltd. Opencity were founded to help service and content providers deliver their products over the Fibrecity network. Companies can market their products on the Fibrecity Open Access Gateway which acts as a sort of shop front to allow consumers to pick and choose the services they need.
"I have followed the progress of i3 Group for a while now, and am utterly impressed by the way it has turned the service provider model on its head. For too long, the market has been dominated by a few players which have restricted consumer choice.
My main objective will be to build on the platform that has been created, and working with the Opencity Media team, introduce more service and content providers on to the Fibrecity Open Access Gateway."
Mark Smith, (CEO) Opencity Media
Earlier in the week i3 Group signed an agreement with Scottish Water to rent a portion of the sewer network across the whole of Scotland. This is good news for Fibrecity Dundee which is set to gain access to the fibre network in 2012. This also adds the option for other Scottish cities to gain a network with Aberdeen and Inverness options that Fibrecity are considering. Fibrecity plan to serve one million UK homes within 4 years.
BT have announced a deal today that will bring ABC TV programmes to BT Vision, their TV on demand service, on the 15th September. 'ABC TV On Demand' will give viewers access to popular US series from Disney's TV production company ABC Studios. This will bring programmes such as Desperate Housewives, Private Practice and Brothers & Sisters being made available through the service after they have had their first UK airing on broadcast television. Customers will also be able to watch past series of hit shows such as Lost, Grey's Anatomy and Ugly Betty.
"ABC TV On Demand is Disney's first launch of an ABC-branded on demand entertainment service outside of the US. BT Vision customers will be able to start, pause or rewind their favourite shows whenever they want without having to fit in with a broadcaster's schedule or missing an episode. This is just the latest addition to BT Vision's array of on-demand channels including Discovery, National Geographic and MTV."
Marc Watson, (Chief Executive of television and online services) BT Retail
"The ABC brand stands for innovative, high quality US television production. Leveraging this to launch an ABC TV On Demand branded service is a logical next step in our digital distribution strategy. Through partnering with successful and like-minded digital media platforms, such as BT, we are able to offer choice to consumers in how and when they enjoy our programming, while maintaining the highest quality of viewing experience."
Catherine Powell, (SVP/GM, Media Distribution) The Walt Disney Company EMEA
The service will cost £6.99 a month with individual episodes priced at just 99p.
BT Wholesale have announced today that they are now running over 5 million broadband users on their Wholesale Broadband Managed Connect (WBMC) over IPStream Connect service. IPStream Connect is the migration path for wholesale customers who have legacy 20CN connections to move these on to the new 21st Century Network (21CN). Making the move allows broadband users to be delivered over a unified link along with the next-generation services such as up to 24meg from ADSL2+ and up to 40meg from fibre-to-the-cabinet (FTTC).
The 5 million milestone comes after 230,000 customers were moved last night at the Ilford exchange which follows further transfers that have been carried out in August at Faraday and Kingston exchanges. Service providers can gain cost savings by moving legacy customers over on to WBMC with IPStream Connect as it allows them to decommission the BT Central pipes which are used for providing the backhaul for older IPStream services which have been in use since broadband became available in the UK back in 2000. BT Wholesale now has over 50 service providers using WBMC and IPStream connect to backhaul their broadband customers.
