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Is free broadband really the future?

Is free broadband really the future?

Is free broadband really the future?

It's around 10 years since BT first opened up trials of IPStream to ISP customers. Since then the broadband landscape has changed beyond recognition. There are now over 16 million broadband lines in the UK and we've climbed the international comparison tables for penetration. Fixed-line broadband is reaching saturation, speeds are increasing and mobile broadband is really taking off. But where do we think broadband is going next? There's no doubt about it, the broadband market is slowing down. Recent figures from broadband analysis company Point-Topic show this as a natural maturing of the market, as broadband adoption reaches saturation. Carphone Warehouse recently pointed to the credit crunch and slowing UK economy as the cause of their slowing sales. It's getting tougher for ISPs, particularly smaller ones, to compete with the heavy price discounting as Sky, TalkTalk and Tiscali race for market share. Some big brands like Orange are even shrinking. It seems that every newspaper is stuffed with broadband ads, comparison sites advertise constantly on the TV and direct mail trying to convince me to buy TalkTalk or Sky keeps flooding through my door (seriously - I don't want it, please stop mailing me!). Of course prices always fall - quality broadband was £50 a month in 2000. We led the way with the first £14.99 permanent price in 2005 and followed that up with BBYW Option 1 for £9.99 in 2007. It seems that prices in the broadband market are eroding faster than ever before. On this trajectory we'll all be getting paid for using our broadband lines in a few years! We believe that as people now use the Internet for voice and video as well as data, broadband has become a must-have service for every home and office. As broadband becomes more important we believe quality of service becomes even more important and we've a full awards cabinet to evidence our credentials. We've already published our plans for 2008/09 and we're on track to make some improvements to our broadband and home phone services later this summer. At the moment we're running a special offer of half-priced broadband for the first three months, provided the customer takes our Home Phone service. Previously we've steered clear of discounting our broadband service and we've had quite a bit of feedback from customers who don't like this sort of promotional tactic. I think it's perfectly possible for us to do special offers while still being absolutely committed to transparency - and we do that by not hiding things in small print with lots of caveats. The reason for looking at price discounts is pretty obvious. On price comparison sites a low price-point is really important for where you are ranked in the value for money tables. If you take Tiscali's entry level broadband product it is £14.99 a month - £5 more per month than PlusNet Broadband Your Way Option 1. However by pricing at £4.49 for the first three months Tiscali 'appear' to be better value on many comparison sites. So for the moment we're testing to see if discounted introductory offers make a difference to sales. If they do, we'll probably do more of this in the future. What we'll always do is offer choice and all round good value for money. As prices keep reducing in the market we'll make sure our products stay competitive so all of our customers, new and existing, get great value and great service from PlusNet. So will broadband end up free for everyone? I doubt it. The only reason anyone can advertise 'free' broadband is because it's being subsidised by higher margin services such as mobile phone calls, international phone calls and of course TV. We think by being a broadband specialist (but also offering an excellent value Home Phone service) we can continue to take on the big guys and beat them, based on the quality of service we offer. This summer we'll be unveiling a new-look PlusNet and we'll continue to prove that we supply broadband worth paying for, while our competitors have to give theirs away for free! Happy surfing. Neil Armstrong Products Director, PlusNet

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27 Comments
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With a touch of irony, I migrated from BT Total Broadband to PN, who retail a BT wholesale product and are themselves owned by BT. However, there any comparison must end. I now have a reliable (but not any faster) broadband connexion and the response time to any questions is very short. So far, all communications have been relevant and not apparently from a script. As a customer, I am highly satisfied. PN must also play up to this strength in its arsenal to win market share.
Grafter
"However by pricing at £4.49 for the first three months Tiscali ‘appear’ to be better value on many comparison sites. " Surely a reason to pressure the price comparison sites to change how they display results (e.g. by either using the standard, post-offer price or a 12-month/contract-term cost). It's a complete contradiction to say that you're being transparent and then saying "But everyone else is cheating so we will too".
Grafter
We can pressure the price comparison sites as much as you like, but as we know from so many other examples (advertised speeds, unlimited etc) our voice alone can't change the direction of an industry. If consumers raised concerns I think it would be a different story, but a company complaining about something like this just looks like sour grapes and does noone any good. The fact is that for our business to survive in this industry, we have to grow faster than our competitors. To do that we have to compete for the same market in the same marketplaces. It may not be how we would prefer to do it, but I'm afraid I don't have an answer as to how we could achieve the same results in another way. All suggestions welcomed! Ian
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@Nerd By complete coincidence I saw a story in The Metro this morning that Ofcom has started an accreditation scheme for comparison sites to try and increase customer confidence. The first two sites to win the accreditation are SimplifyDigital and BroadbandChoices.
Grafter
i hate the 3 months offers isp's use to get top of the list of value broadband but well understand why pn have to get in to bed with tiscali and others. As long as you rember why most of your customers pay full whack for there connection with out needing to be tempted by a few quid off then u should be o.k. You just need to make shaw that when these customers that buy on price alone on there 1st months bill of full price that you have teached them about Q.O.S by this time and why they will be paying slightly more than most other isp's charge. You have got all the information any one would need on the website but alot of people are not like me and read every page top to bottom. I started on the 1gb option 1 for price and as i learned about Q.O.S side of isp's. i changed my mind about jumping ship to a unlimted isp at end of contract and upgraded to option 3 instaed. so basicaly what my thoughts on 3 month offer is that once you have these customers that buy on price alone that by the time they start paying the full price you have them hooked on your Q.O.S and not price. Good luck neil in druming this into the heads in 3 months if u dnt they will say to them selfs why am i paying ten pounds when i could go to ******* and get it free. i blanked the isp's name as i dnt want to advitise there bussiness for free hehe
Newbie
I think free broadband is the future. I read an article in the Economist about web advertising. http://www.economist.com/search/displaystory.cfm?story_id=11482452 As the controversy swirls, Google, the 800-pound gorilla of the internet-advertising industry, is quietly watching. ISPs around the world have looked on jealously as Google has grown rich on their subscribers’ web-browsing, while the ISPs have been reduced to “dumb pipes”, ferrying internet traffic for subscribers but unable to win a share of their online spending. I think once Google has beaten MSN and Yahoo the next logical step is to provide free internet. With all the extra data, Google would be able to perfect it's search engine. It could make money on the Adwords (or possibly a souped up version based on CPA), Google Checkout and its Premier Apps.
Grafter
ben i dnt think that would ever happen as microsoft got it self in hot water when bill's own goverment wasnt happy that he had a strong hold over the market. so i dnt think they would allow google to become the masters of all the internet. i for one would not take up free broadband from google they get enough information on what we search for though the engine let alone allowing them to know every bit of traffic that u send and recive. Nope if that day ever came i would be still with plusnet.
Newbie
pn customer, Microsoft got done for abusing a monopoly position. There's nothing wrong with having a strong hold over the market, its just when you use it to stifle competition. I am glad of what Microsoft did anyway, Netscape used to charge £20 or so for an internet browser. Thanks to Billy G, its free. Google wouldn’t be breaking any laws by offering free internet. There would be nothing the government could do to stop them.
Grafter
Just checked out Simplify Digital - it's bloody awful. Orange broadband at:
£10.00 for 3 months and then £20.00 (plus £10.50 BT line rental)
was "cheaper" than Talktalk at:
£15.49 (including TalkTalk line rental)
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I cannot understand how suppliers who re-sell BT Broadband are able to charge less than BT does.
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Hi Pasty Muncher, I think one of the things that you need to consider is that we're not reselling a BT Retail service (like Total Broadband). We're actually reselling a BT Wholesale service, like a number of other ISPs in the country (including BT Retail). BT Retail are tied to the same costing infrastructure as these other ISPs as they're not allowed to gain a commercial advantage by doing so.
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Yarrrr - thanks James.
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I agree that more "free" broadband will appear in the future but I think that many organisations will misread broadband's price elasticity. decrease the price and you may decrease the demand for your product. decrease it to £0.00p and you start to create mistrust. i certainly do not trust any business that wants to give me something for free. nothing is ever free. quite simple. i am willing, and want to pay for a product if service and reliability of that product is important to me. the old adage of you get what you pay for springs to mind. as you say Neil, you'll likely have to pay inflated fess on (mandatory) bundled services to get this so called "free" service anyway. of course some businesses try to offer a no-frills free service just to capture you and prime you for up-selling, but again you get what you pay for. that might work for me where certain software products are concerned but not my broadband.
Grafter
Apparently Simplify Digital are doing a redesign that will default to ranking sites by first-year cost rather than the misleading headline figures currently abused by providers. Is this likely to have an impact on Plus.Net's "Summer Sale" type deals?
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@Nerd I'm glad to hear that some sites will be moving to listing the first year cost - we'd certainly prefer it if all sites did this! When the offer finishes at the end of the month we'll have a look at what it's done for sales, reassess how the comparison sites list our products and then decide whether to do something similar again or not.
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I don't mind paying £10 a month for broadband, but I'm not happy about only getting 1 Gb quota for it. Plusnet's recent treatment of Broadband Your Way Option 1 customers is appaling IMHO (I speak as a Force 9 subscriber pretty much solid for 10 years!). It's left a real sour taste in my mouth - especially as I can go to O2 (who offer good service levels and have high customer satisfaction stats) for £7.50 a month for unlimited usage as I am already an O2 mobile customer. I have still not ruled out dumping Plusnet over this. Increasing Option 2 by multiple gigs of usuage and not giving option 1 any increase at all was a sad day for Plusnet....
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Daz - totally agree about Option 1 although I am aware of the reason i.e. the profit margin on this product is miniscule. Without my referral discounts, I would pay £24.99 per month for my Homephone+broadband. If I went to Tiscali it would be £19.99 with no 1GB restriction. The same applies with TalkTalk. Like you, I have been a long-time Force9 customer but I have to say that I constantly think of jumping ship to save a bob or two.
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Forgot to add that my connection is so trouble-free with PN that I would be terrified of changing to another ISP in case of problems. 99% of the time customer service has been excellent and on reflection, the extra bit of money is well worth it. However, could Option 1 allowance be increased by 0.5GB or 1GB please?
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Ben you are really depressing me Smiley I hate it when people talk the "google dominance" theories. Because I know true examples of it... I do hope they won't go that far. Right now they operate mainly in the search application plus services and web apps markets, providing free website analytics, keyword research, adwords management, document sharing - that kind thing. Actually thinking out loud here... Do you know the one reason why Google cannot ever be an ISP service? They have lousy customer service. (That's why they cater only to supremely web savvy clients. They don't even explain clearly how Adwords works!)
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Yes, I think much the same as Daz and Poppy - considering a move. NP is not really cheap enough for the very basic service that I want.
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What will happen to old buffers like me who don't wish to download music and DVDs, and who are perfectly happy with present speeds? Are we going to be obliged to pay more so that others can have their higher speeds?
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I am well aware that most if not all customers would like free or cheaper broadband, who wouldnt, but i have to say that when you have got to grips with your computer and know what you are doing, what does what and when and how etc, the only thing that matters is speed and uptime with you broadband, this applies to any form of internet connection too, you can keep it if its slow, cheap, etc, pay more than the other ISP's are asking, sure IF the speed and uptime are optimal. All ISP's boast how great they are, Plusnet too, but cmon, how far are we behind the rest of the world on speed, and do they pay a fortune for it, no,so in summary, i personally would pay more than i do now and to date are reasonably happy with Plusnet, but speeeeeeeed is and always will be paramount for me, i do not download heaps like Dave T mentions above, i aint an old duffer either, i just want to crack on without having to wait, an wait etc after clicking a link etc, more speed more bucks,but as yet, just not fast enough for me to part with anymore than i am paying now. Virgin talk of possible 100mb speeds in the near future, and Plusnet talk of ADSL2+ and 24mb speeds, even if they deliver and Virgin only deliver half of what they promise its still twice as fast, i cannot get Virgin where i live, but if i could, i seriously would be thinking about it Plusnet, very seriously.
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Well it's nice to see Poppy and C Davies that i'm not alone in my unhappiness of recent Option 1 customers treatment. And yes, I got the same (lame) reason Poppy for no increase in quota. I'm sure they could have rustled up a 0.5 GB increase or something. I mean they near doubled Option 2 usage quota (up 87.5%) even though the monthly fee is only 50% more. Are you listening Plusnet! Some not happy peeps here.....
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@Poppy and Daz We hear you. Watch this space....
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For Neil Armstrong: My PN connection used to run at 2.8Md/s for many months, though subject to sometimes frequent but very short disconnects due to random noise on the line. Recently the DSLAM raised my min SNR to 12dB and the speed has dropped to just 1.4Mb/s with actual download speed just 800kb/s. Your staff has got BT to lower the limit to previous 6dB, but it's very quickly climbed back to 12dB. Your staff says that it can't be changed again ! So now I get half speed, yet still get the same disconnects, that seems daft to me ! Can't you get BT to understand this, and where the customer want it, go back to previous version of DLM ? Thanks, regards, Martin username jerryw BTW yes, the Option 1 1Gb limit is now unfair
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Hi Martin, BT Wholesale have made a number of refinements to their DLM logic over the months, most of this has been primarily aimed at increasing stability however it's seems like you're speed's suffering as a result of this. Whilst we could ask BT to reset your target SNR, you can understand their reluctance if the DLM kit is just going to raise it again. The reason it's being raised will be due to low sync events on your line: Sync Rate (kbps) | Sync Timestamp 1440 04/07/2008 19:02 1152 04/07/2008 18:55 1152 04/07/2008 18:55 1440 04/07/2008 18:44 1440 04/07/2008 00:49 1440 04/07/2008 00:49 1728 17/06/2008 04:16 1728 17/06/2008 04:16 1440 15/06/2008 03:37 1440 15/06/2008 03:37 1440 13/06/2008 17:53 1728 05/06/2008 15:36 1728 05/06/2008 15:36 864 05/06/2008 12:16 864 05/06/2008 12:16 1728 03/06/2008 01:39 1728 03/06/2008 01:39 1440 01/06/2008 19:20 1440 01/06/2008 19:20 1440 01/06/2008 19:20 1728 01/06/2008 10:22 1728 01/06/2008 10:22 1728 01/06/2008 10:21 2016 31/05/2008 04:29 2016 31/05/2008 04:29 2016 30/05/2008 10:23 2016 30/05/2008 10:23 2272 29/05/2008 14:11 2272 29/05/2008 14:11 1152 28/05/2008 02:45 1152 28/05/2008 02:45 2272 22/05/2008 11:17 2272 22/05/2008 11:17 2272 22/05/2008 11:17 1440 20/05/2008 11:18 1440 20/05/2008 11:18 1440 20/05/2008 11:18 2016 12/05/2008 00:15 2016 12/05/2008 00:15 1728 07/05/2008 04:36 1728 07/05/2008 04:36 1728 29/04/2008 22:32 1728 29/04/2008 22:32 2016 29/04/2008 04:04 2016 29/04/2008 04:04 2272 19/04/2008 00:15 2272 19/04/2008 00:15 2016 14/04/2008 19:07 2016 14/04/2008 19:07 2272 11/04/2008 00:15 It's not easy to balance speed against stability and Wholesale need to be careful to maintain the volume of faults raised to them. It looks like you have interleaving (error correction) enabled on your line. I could remove that for you if you like which might help increase your sync speed slightly? Failing that you might be able to force your router to connect with a reduced SNR value using the following piece of software - http://www.kitz.co.uk/routers/DMTv8.htm - This is done at your own risk though and is not something that's supported by our help desk. You'd also need a compatible router. You might also want to consider monitoring the SNR fluctuations on your line. You can do this using the software here - http://www.vwlowen.co.uk/internet/betatesters.htm - You might find that the SNR fluctuations/interference on your line coincides with an event in or around your house. I recently found out that the spotlights in my drive were knocking my ADSL line out when they came on by using this software. Rgds, Bob
Just browsing
For me what is frustratingly slow is the upload speed. I generally get 2MB download speed which is reasonable as its more often the site I'm looking at that the rate limiting element not connection speed and I seldom watch video. I don't do file sharing but do need to send photos and this ever so slow upload is a killer. Some countries have DSL not ADSL for similar costs. When will this be tackled instead of just aiming everything at the game and video viewing audience?