Take-up of superfast broadband services is price dependant
Wednesday 14 December 2011 14:18:01 by Andrew Ferguson

The UK has been a late entrant to the fibre to cabinet and premises game, but in terms of cable broadband and DOCSIS 3.0 it has generally kept pace with the rest of the world in terms of availability. The sixth International Communications Market Report 2011 from Ofcom highlights two main areas, low take-up of superfast services in the UK, and the lagging behind in getting a 4G mobile network roll-out underway.

Unfortunately there are lots of gaps in the data, and the Ofcom report acknowledges these information gaps, for example no data from Numericable in France and US cable providers on how many customers take superfast services. Additionally in some countries people are taking a service delivered by a superfast capable service, but opting for a lower speed product. The result of this is that while the FTTH (Verizon FiOS) has good take-up, many customers are on the slower 15 Mbps service ($54.99 a month), 25 Mbps is $74.99, a 50 Mbps service costs $144.95 a month and 150 Mbps is $199.99 (FiOS prices are plus taxes).

Ofcoms own research has shown that value for money is a key consideration when people are buying superfast services, something that is very much bourne out by the fact that Virgin Media has revealed 70% of its customers are on its cheapest 10 Mbps product, and only 5% subscribe to the 50 Mbps product.

A key driver of take-up for superfast also appears to be the bundling of IPTV services, for example in the US, 76% of Verizon FiOS customers take a TV service too. IPTV has not really took off in the UK, but that may be down to the popularity of Sky TV and the availability of cable TV services. Oddly though in terms of viewing TV catch-up services over broadband the UK is well ahead of the pack, perhaps in part due to the influence of the BBC and other TV content providers launching similar catch-up services.

If there is a conclusion to be drawn from the report, it is that there is no single one pattern to making superfast broadband investment successful, where it is popular it is often the same or lower price than older/slower technologies, with the cost of roll-out being heavily bourne by the early adopters who are keen to utilise the faster product options. Therefore perhaps the way forward should be what some smaller states are doing, and remove existing legacy networks to reduce maintenance costs, and roll-out new fibre networks. Alas as a late starter in this arena the UK appears to not have the money to do this on a large scale, and the regulatory environment in terms of battery backup for emergency phone services tends to preclude this approach.

There are many that would have us believe that the day of fixed line broadband is dead, but looking at the mobile data usage data in the Ofcom report, it shows that it is lagging a long way behind fixed line broadband (UK average for fixed broadband is 17,000 MB).

In theory given enough cell towers and backhaul capacity the 3G networks might manage to meet projected usage figures for 2015, but in reality the roll-out of 4G which can support higher data usage per cell tower will be well overdue by 2015. For those making heavy use of mobile broadband the roll-out of 4G in the UK needs to be faster, but alas it is another of those processes where there seems to be no shortcut, apart from providers doing more and more trials in areas where this is feasible.