The telecoms companies aren't helping people sign up for broadband
Financial Times, July 23, 2002

On May 21, Richard and Anjanette Inzunza, who live in north London, signed up for BT Openworld's Home 500 broadband internet service. Keen to get into the fast lane of the information superhighway, they paid the £85 installation fee, received a modem in the post, plugged it in and waited for the flashing lights to go steady, indicating that a successful connection had been made. Eight weeks later, the lights were still flashing and they were still not connected.

"I made many calls to technical support," says Mrs Inzunza, "each time being kept on hold for between 40 minutes and 1 hour 20 minutes. Every time I got through they said they would call me back in 48 hours or that an engineer would come, but they never called me back and an engineer never appeared. No one could tell me what the problem was." Meanwhile, BT Openworld was charging them £29.99 a month for a service they hadn't received and their requests for a refund were refused.

The Inzunzas experience may be unusual, but it is not rare and it illustrates a significant barrier in the way of the government's vision of a "Broadband Britain". If users have to put up with unpredictable technology, poor service, long helpline queues and baffled engineers, they are unlikely to see much point upgrading from their dial-up connections.

Clive Sheppard, a technical consultant at Synapse UK, which specialises in installing broadband internet services, reckons that 25 per cent of people who order "wire-only" broadband packages - where the modem is sent to the customer for them to connect themselves (see story left) - have serious problems getting the technology to work. And having an engineer come to the house can be frustrating - many connections involve at least three parties: the internet service provider (ISP), British Telecommunications (BT) and the customer (with their not-always-reliable PC), so attempts to get things fixed can often end up becoming a blame-passing exercise.

The UK is ranked second last among the G8 countries for broadband use per head of population, ahead only of Russia. With 0.5 per cent penetration, compared with 4.2 per cent in the US, there is a long way to go. However Jan Dawson, an analyst at telecommunications consultancy Ovum, says that, as well as bad customer service, there is a raft of reasons why people are not signing up.

A key factor is content. People will put up with poor service and ropey technology if there is something good for them at the other end. Broadband, however, is so far not offering that much. "There is a lack of compelling content on broadband," says Dawson. "People need to see a good reason why they should upgrade from their dial-up service to a broadband connection at twice the price." Especially if the process is likely to be troublesome.

One company trying to buck this trend is AOL, whose residential broadband service includes an "exclusive" bundle of content available only to its customers. These include movie trailers, news feeds, music, video and cartoons. The move is in the right direction. As Phil Male, executive director of operations at Demon, the ISP, puts it: "You have to market people a service, not a technology."

However most of this content, such as news from CNN and cartoons from Cartoon Network, is available elsewhere. The exclusivity lies only in the way AOL has brought it together. Even if customers could use broadband connections to watch Hollywood blockbusters before anyone else (assuming they would want to watch on their PC), they might still find it difficult to sign up. In the UK, the market is split broadly between Asymmetric Digital Subscriber Line (ADSL) technology, which uses existing phone lines to provide a fast internet service, and cable. (Broadband is also available via satellite and short-range microwave technology.)

According to Oftel, the telecom regulator, while ADSL is available to about 15m homes in the UK and cable is accessible to about 9m, there are only 290,000 ADSL broadband subscribers and 419,000 on cable. One of the barriers to increasing take-up is that both technologies tend to cover the same locations - mostly urban and suburban. Many rural areas (and even parts of cities) have no broadband provision. Nor is the situation likely to change quickly. Cable companies, saddled with debt, are unlikely to be digging up any more roads soon and ADSL won't work for customers more than 5km away from their local exchange - the signal deteriorates with distance.

Consumers also find it hard to distinguish between rival ISPs. About 200 ISPs market broadband using ADSL technology, but virtually all are reselling a BT wholesale product. This means that, whoever you sign up with, you will still be connected to a BT modem in a BT exchange. ISPs can offer some differences in speed and contention ratio (the number of users who share your connection, so reducing your speed) by upgrading their own connections to the net. But on the whole they are limited by the services that BT chooses to offer.

As a result, according to Sebastien Lahtinen, co-founder of the online ADSL information service adslguide.org.uk, ISPs can only really differentiate themselves from the competition by the quality of their internal networks and customer service and by providing extras such as web-page and e-mail hosting. "You only have to look at the queue times for support lines to see the difference," he says. Things are changing, though. Wholesalers such as Bulldog and Easynet have moved equipment into BT exchanges to offer new products, such as S (for symmetric) DSL. This offers equal upload and download speeds (ADSL uploads data more slowly), which is useful for companies running websites from their own premises, for instance.

Meanwhile, BT Openworld has now fixed the Inzunzas' connection - it turns out they had been sent a faulty part. It says 90 per cent of its customers are satisfied and that it has increased the helpline staff. BT has set itself a target of 1m ADSL subscribers by mid-2003.

However, for things really to take off, broadband has to have a clearer raison d'être, particularly for users who already have a high-speed internet connection at work. As Dawson puts it, "This is a technology waiting for an application and an application waiting for the technology." If Broadband Britain is going to become a reality, the only hope is that the wait is not too long.