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Broadband suppliers face a crunch time too

Broadband suppliers face a crunch time too

The question of why - or even whether - broadband adoption has slowed as the pool of dialup users has shrunk has struck a chord with you, as evidenced by the letters (well, emails) we've received in the past couple of weeks.

BT challenged the idea that adoption was slowing down, sending me a chart (sadly without the original numbers included) which it insisted showed that the broadband market was growing more quickly than the analysts Point Topic estimated.

And indeed, Point Topic admitted that rather than the 470,000 new connections it was expecting, there were a total of 600,000 new broadband connections in the past quarter.

That's good, but I think there's still trouble ahead for broadband providers on a number of fronts. First, there's no doubt that the pool of dialup users willing to switch is shrinking, and that the number of people with no internet aiming to leap online isn't big either. The broadband era faces a crunch period. Costs are static; revenues, being forced down. Where can growth come from?

Maybe it's this which has got some of them grumbling about products such as the BBC's iPlayer. You'll recall that when this peer-to-peer service, which lets you download and watch BBC TV content, launched in the summer some of the broadband ISPs began muttering about how if the BBC was going to encourage people to use their broadband accounts so much, then maybe the BBC ought to help out with the cost of the infrastructure needed to support it.

The essential daftness of this idea was rather neatly described by Andrew Wilding, managing director of the streaming media company Vividas, when I met him last week. "Wasn't it ISPs who were saying two years ago that you needed broadband so you could get access to all this wonderful content, and wasn't it Charles Dunstone [head of Carphone Warehouse and TalkTalk] who said that other ISPs had been ripping people off for years? And now that people are starting to do what two years ago they were told they should be doing, the ISPs are complaining. It's comical really: they're saying they should get paid by both ends of the transaction - the users and the providers."

If the ISPs can pull it off they'll certainly be laughing, but I can't think of anyone who's ever managed to make money from people on both sides of a transaction that they're in the middle of. (Merchant bankers perhaps?) Instead the pressures on ISPs are likely to increase, and there won't be any hiding place. The European Commission said recently that it wants to legislate so that people will be able to change broadband ISPs in a single day, and there's some pressure on Ofcom to oversee the broadband speeds that we actually get at home and in business.

The Ofcom consumer panel, headed by Colette Bowe, has written to the heads of the UK's six biggest ISPs asking them to define what "up to" means when they talk about line speeds.

I'd have thought it was obvious: it means you might get that much, although you'll probably get less. The reasons are purely scientific: the broadband data is transmitted at a supersonic frequency, and that gets attenuated by the copper line. The further down the line it travels, the less reliable the signal, so more error-checking is needed.

If BT replaced all its copper lines with fibre-optic cable, that would cease to be a problem, but that's going to be so expensive that it would be unreasonable to push the cost on non-users (who remain a significant proportion of the population).

Which leaves either us paying for it, or the content providers. Somehow I think we could be waiting a while...

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