Free Broadband Access: Purely a UK Phenomenon?: Industry Research Report

Free Broadband Access: Purely a UK Phenomenon?

Published Date: May 2007

Published By: IDATE

Page Count: 40

Order Code: R221-166

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2006 has seen a wave of new broadband service offerings in the UK market, targeted at existing and new broadband consumers and heavily promoted as ‘free’. Starting in March 2006 with new-entrant CarPhone Warehouse, with it’s radical promise of a ‘free forever’ service, it was rapidly followed by a range of high-profile announcements from Orange, BskyB, Vodafone and other new players, along with existing broadband providers such as NTL Telewest. Considered by some observers to be short-term marketing tactics, it is now apparent that more fundamental shifts in the market may be occurring as major players seek to retain existing fixed-voice and TV customers, increase ARPU by offering new services, and build new market share.

The UK consumer now has a bewildering array of broadband services on offer, but the true cost is not always easy to discern - requirements to take other ‘bundled’ services, longer contract periods and the inclusion of other value-add internet services serve to complicate the simple ‘speed and download limits’ buying decision.. But early take up has nonetheless taken some operators by surprise, leading to early industry concerns regarding provisioning delays and costly customer support.

Incumbent operator BT continues to play at the higher end of the market offering sophisticated and integrated services rather than joining the price battle of the new entrants. But it is nonetheless aiming for additional market positioning from wholesale rental of it’s broadband services to other operators.

With the UK market fiercely competitive - evidenced by the recent withdrawal of Cable & Wireless from the retail broadband sector - and with movement of players into new sectors still continuing, the longer-term sustainability of free and very low cost broadband offerings is far from clear.

Answers to key questions