Broadband News

USC could boost British e-commerce by £1.4 billion

An additional £1.4 billion could be generated through website sales due to the 2Mbps universal service commitment (USC) for broadband, according to research by the Institute of Practitioners in Advertising (IPA), a trade body for UK advertising media and marketing communications agencies. The IPA have extrapolated that the extra revenue would come from replacing dial-up connections with broadband where people are still on these old style connections. The number of users still on dial-up connections was estimated at 4.9% by the Office of National Statistics in 2008.

On the basis of existing user behaviour, users with high speed Internet connections are 36.9% more likely to make an online purchase than those still on slower dial-up services. The figure of £1.4 billion was weighted to take in to account that some users may not want to convert to a broadband service, but it doesn't account for users who may currently use broadband elsewhere, such as at a friends house or at work. There may also be people who bridge the dial-up step and go straight in to a broadband service.

"Clearly we're assuming that the behaviour of the 4.9% who currently use a slow internet connection is going to follow the pattern of those who have gone before in graduating to the fast internet experience. But even if they only increase their online purchasing by half that of their peers, it would still represent an enormous amount of additional e-commerce. Having observed how quickly even the most unlikely people adopt new online behaviours when it's a much more user-friendly experience, I know where my forecast lies!"

Mark Fagan, (Chairman) IPA Search Group

Increased business to e-commerce is of course good news, but it will come at the detriment to traditional businesses on the high street which are likely to lose money from the conversion of sales to online. Many businesses have of course already addressed this by opening an online store to complement their traditional high-street presence.


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